With Office 365 if you want to take advantage of Dynamic Distribution Groups, those groups have to be created in Office 365. While that works great in a lot of scenarios, there are cases where organizations want to create and manage all groups in their local AD and then utilize the Microsoft Directory Synchronization utility to synchronize the groups and their membership to Office 365.
For that scenario we have created a small utility called Dynamic Groups. Dynamic Groups is a service that runs on a local domain controller and uses LDAP filters to auto populate groups on a daily basis. When users fall in or out of the filter, the group membership is updated in the local Active Directory, which is then synchronized to Office 365 using the Microsoft Directory Synchronization Utility.
Dynamic Groups is a free utility.
FREE Tech Tool – Dynamic DL Functionality with AD Groups