Currently Blackbaud does not support Microsoft Exchange 2016 or Office365 for RPC over HTTPS integration.

This would indicate that the site would have to use SMTP Relay. Also Blackbaud doesn't support hybrid on premise environments either so you wouldn't be able to set this up locally and still receive hosted services as this is a breech of contract.

We need our Actions to be functional with Outlook via email reminders and calendar notations.  In a hosted environment we do not have these functions which are necessary for our fundraisers - Moves Management and Stewardship