In short, Crm 2011 Report extension (SrsDataConnector) is required component but it is not installed as the main crm installation. You can find the detailed installation guide in the chapter 2 (Page 13) of the Microsoft Dynamics CRM 2011 Installation Guide.doc
All installations now require the CRM 2011 Report Extensions to be installed and configured on the SQL Reporting Server. If it is not installed, certain features will not work properly: reporting will not function, creating new organizations, and organization imports will be blocked until the extensions are installed and configured.
http://blogs.msdn.com/b/crminthefield/archive/2011/03/11/crm-2011-server-setup-commonly-asked-questions.aspx
http://yellowduckguy.wordpress.com/2011/06/01/microsoft-dynamics-crm-2011-reporting-extensions-is-not-installed/
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