Hi,

I have to configure SCOM 2012 R2 notification SMTP Channel. in my infra i have no any SMTP relay server on premise, i am using Exchange online . I configured  smtp.office365.com as SMTP server but notification is not working . i have already add SCOM Server IP in Exchange Inbound Connector ,, please suggest if any other configuration required for the using Exchange online SMTP server address for the SCOM Notification..

I don`t want to configure any SMTP server in on prem

You should be perfectly able to use Exchange Online SMTP Relay with SCOM notifications.

Are you sure you added the SCOM server public IP address to your exchange inbound connector?

You can read more about configuring SMTP Relay with exchange online here : https://technet.microsoft.com/en-us/library/dn554323

The error appears to indicate that there's an authentication issue. I'd check a couple of things.

1. Does your Management server have permissions to authenticate to your hosted Exchange? Are you using a special notification account (windows account) linked to the notification profile? If not, SCOM will attempt to use the default action account. Interface with your Exchange/ O365 Admins to confirm that SCOM is trusted by Exchange..

2. In the notification channel settings, what do you have for a return address? Are you using a non-existent email address or an actual email account? If the former is the case, try using an actual Exchange email account in the Return Address field. 

thanks gautam,

yes i am able to telnet smtp.office365.com over port no 25 and 587 both..

can you please confirm the actual port on which will work...

You need SMTP Server used as relay to can send SCOM Email notification using office 365 except that you can't because you will need to add SCOM Server in trusted to all him to use Exchange online in sending mail.

You can check below link {it's same for SCOM}

http://blog.scsmsolutions.com/2012/02/setup-notification-from-scsm-to-exchange-online-office365-mailboxes/