The latest release of DIRSYNC (version 6553.0002) can now be installed on a domain controller according to the release notes at:
The details on how to go about this are located at:
DIRSYNC is a stand alone application that copies information from the local active directory (user names, passwords etc) and copies them to Office 365, saving you from having to create these attributes in Office 365. DIRSYNC continues to copy any changes from the local Active Directory to Office 365 as well.
This is a HUGE improvement for smaller customers who typically only have a single server in their environment which runs as a domain controller (read Small Business Server).
It again points to fact that Microsoft is continuing to make incremental improvements to Office 365 in light of what customers are asking for. They don’t always come as quickly as we would like but they do come as evidenced above.
Now’s there’s one less excuse for smaller customers to configure Office 365 and one less excuse for going hybrid.