Several people have asked me recently if Dynamics CRM 4.0 will work with Exchange Online, Microsoft's new hosted version of Exchange 2010. It seems like many companies are considering outsourcing Exchange to Microsoft, which to me sounds like a great idea.
The answer to the question of compatibility with Microsoft Dynamics CRM is "yes!"
As of the Nov. 2009 R4/Update Rollup 7 Email Router, Exchange Online is now an option. The CRM team achieved this by changing the e-mail router to use exchange web services for sending and receiving emails--so in effect, they have totally changed what is happening under the hood while preserving the functionality and the user experience.
This means that you can have full email sending and tracking capabilities using CRM with Exchange Online, including forwarding in-box or workflow emails sent using the email router.
Some small considerations:
You can't have CRM E-mail routher configured to use both on premises Exchange and Exchange OnLine. You have to use one or the other
Exchange Online doesn't send emails AS another user, it sends them ON BEHALF OF another user--what this means is that emails like workflow generated emails where an administrator sends an email as a different user would appear differently than they do with on premised Exchange--they would say "Mary Jones on behalf of John Smith." Microsoft says that if you want to enable sending as other users with Exchange Online, you can, but it requires you to log a support call.