Outlook not connecting after password change while using ADFS/SSO

Recently we encountered an issue where a client was using Exchange Online authenticating using ADFS/SSO.

Issue: Outlook would not connect to Exchange Online after changing the user’s password in Active Directory.

Troubleshooting: 

• We ran Outlook in Online mode, this remedied the issue but was not something the client wanted to do for the organization.
• Clearing the local credential cache from Windows also resolved the issue. However, this is not a fix so much as a workaround.

Resolution

Interestingly enough, after stumping Microsoft support for a few hours,  we decided on a whim to enable Modern Authentication for Exchange Online withing the Office365 tenant.

The commands are as follows:

Step 1. $Credentials = Get-Credential

Enter in the account with administrator priveledges to the tenant.

Step 2. $Session = New-PSSession -ConfigurationName Microsoft.Exchange -ConnectionUri https://outlook.office365.com/powershell-liveid/  -Credential $Credentials -Authentication Basic -AllowRedirection

Step 3. Import-PSSession $Session

Step 4. Set-OrganizationConfig -OAuth2ClientProfileEnabled:$true

Note: You can check to see if it is already enabled or verify the command worked by entering the following:

Get-OrganizationConfig | Select Name, OAuth*