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we have our Sharepoint report databases on a different PC from the Sharepoint Databases.

For example: PC1 has sql server with the sharepoint report services db's. PC2 has sql server with the rest of the sharepoint Db's.

We want to consolidate things and I was wondering if it is ok to put the Sharepoint reporting services db's on PC2 but under its own sql instance? Thanks!

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Running SharePoint Database together with reporting Database is supported. Microsofts recommendation to scale out to a Second Server is - like most Sizing-recommendations for SharePoint - for relative big deployments. Or to sell SQL licenses. :-)

Have a look at disk and cpu utilization on your reportig Server. Ideally get a Long-term Graph from your Monitoring System. Normally you should be able to put the addidtional workload on your existing database Server.

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This how we have our Reporting Services service installed and we don't have any performance issue. Anyway, we don't have so much reports work so it's difficult to assess the performance, but all depends on your users work load.

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Microsoft's guidance is to dedicate a SQL Server to SharePoint. Anything else goes on other servers. Your best practice will depend on the SQL Server, your SharePoint content and load, and the impact of the SSRS reports. If the loads are light, try them all on the same server. You can always move them later.

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