You need to ensure that you can use the Windows Azure Active Directory Sync tool to synchronize the

HOTSPOT
An organization prepares to migrate to Office 365. The organization has one domain controller named
NYC-DC1 and one server named NYC-DS that is designated as the directory synchronization computer.
The organization has the following servers:

You plan to upgrade the servers to support directory synchronization.
You must upgrade each server to meet only the minimum requirements by using the least amount of
administrative effort.
You need to ensure that you can use the Windows Azure Active Directory Sync tool to synchronize the
local Active Directory with Office 365.
What should you do? Select the correct action from each list in the answer area.

Answer:

Explanation:
NYC-DC1 Raise the forest functional lever to Server 2003 and for NYC-DS Install Server 2008 R2
Standard.

http://msdn.microsoft.com/enus/library/azure/jj151831.aspx#BKMK_ComputerRequirements