As a best practice, SharePoint should be installed using a SQL alias.

Think of a SQL alias like a DNS record, but also being able to refer to a specific SQL instance name.

If you need to upgrade database servers in the future, you will usually be keeping the existing DB server in place, and creating a separate DB server environment (e.g. SQL 2005 vs SQL 2008). If you had your SharePoint installation configured with the server name details of the SQL 2005 environment, then now you have to undertake a long and arduous process to move to 2008.

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