I'm running an AD environment with a virtual DC running 2008r2 on Hyper-V, a physical DC running 2008 at a remote location, and another physical DC collocated with the vitual DC, running 2003r2. This last DC is very old and the hardware is failing. I am transitioning roles off of it. The plan will be to put in a new DC running 2012. Forest is at 2000 and domain is at 2003. I have to raise the functional level of the forest to install the new server, to a minimum of 2003. Should I go through all the work of preparing for this transition only to stop at 2003, or should I just change both forest and domain to 2008? It's a very simple environment (7 policies in the whole thing and about 50 users). I'd rather raise it as far as possible- what are the risks? I know rolling back is a big deal, and the change will have to complete late Saturday night, so time is a factor. What is the likelihood of failure? None of our custom apps even use AD. Other considerations: we heavily use Citrix XenApp 5 as a terminal server, Exchange 2007, SQL Server 2005, 2008, 2008r2.