When you run a client application that works with Office 365 such as Lync (Lync: An Office program that provides instant messaging, a contact list, audio and video conversations, online meetings, desktop sharing, and more.), Outlook, Windows PowerShell or Windows Azure Active Directory Sync tool, your credentials must be authenticated. Office 365 uses a CNAME record to point to the correct authentication endpoint for your location, which ensures rapid authentication response times.
If this CNAME record is missing for your domain, these applications will use a default authentication endpoint in the United States, which means authentication might be slower. If this CNAME record isn’t configured properly; for example, if you have a typo in the Points to address, these applications won’t be able to authenticate.
If you are using Office 365 Small Business and Office 365 manages your DNS records, Office 365 sets up this CNAME record for you. If you are managing your own DNS records at your DNS hosting provider, to create this record, follow the instructions for your DNS hosting provider.
If you are using Office 365 Enterprise or Office 365 Midsize Business , to create this record, follow the instructions for your DNS hosting provider.