The Setup of Windows Server 2012 Essentials has a step “Set up email alert notification”. To my surprise TLS encryption is not an option and since TLS encryption is required by Office 365 we need to create a SMTP Relay before finishing this step. This is not a perfect solution, but a working solution. So if you have any better idea, let me know.
Determine Office 365 SMTP Settings
First we need to know the Office 365 SMTP settings:
Login to the Microsoft Online Services Portal > Choose Outlook > Click Questionmark (upper right corner) > Choose Info > Look for SMTP settings and write down Server name.
Install Windows Server 2012 SMTP Relay
First of all make sure your logged in as an administrator.
Go the the start screen and type “Server Manager” (Not default available in Windows Server 2012 Essentials). Click on Manage and choose “Add roles and Features”.
Type Next > Next (Installation Type)> Next (Server Selection) > Next (Server Roles) > Features – Enable “SMTP Server” – Click Add Features (required for SMTP Server) > Next > Install > Close.
Configure Windows Server 2012 SMTP Relay
Go in Server Manager to Tools > Internet Information Services (IIS) 6.0 Manager > Right-click [SMTP Virtual Server #1] > Click “Properties” .
Click “Access” tab > Click Connection > Check “All except the list below” > OK > Click Relay > Check “All except the list below” > OK.
Click “Delivery” tab > Click “Outbound Security” > Check “Basic Authentication” > Type username and password of Office 365 user > Click “TLS encryption” > OK > Click “Outbound connections” > Change “TCP port” to 587 > OK > Click “Advanced” > Fill in “Smart host” with the name of the Office 365 SMTP server > OK > OK.
Warning! You have an open relay now. Use this setup to check the email notification system. When you see it’s fully functional go back to the “Access” tab and narrow down the “Connection” and “Relay” settings to the necessary systems. When no other system needs to relay, just check “Only the list below” and grant “127.0.0.1” access.
Configure Email Notifications Windows Server 2012 Essentials
Make sure that the “From email address” is equal to the adres of the user connecting to Office 365 in the SMTP Relay, otherwise Office 365 will block the connection.
SMTP Server name is : 127.0.0.1
This is my solution for the moment. If you have a better one, please let me know. As I said, this is a working solution, but not a perfect one.