This post assumes you have already installed Business Intelligence Studio (BIDS), which can be installed from the SQL media disc, CRM Report Authoring Extensions, and you have a Report project created in BIDS.
The first step you will take is to create the Report. Using the report Wizard, right-click the Report project folder in BIDS.
The Report Wizard will open unless you previously selected not to use it. Select Next
On the next screen give the Data Source a relevant name, select a Type = Microsoft Dynamics CRM Fetch and enter the Connection String in the following format: https://CRMOnlineURL;OrganizationUniqueName
You can find and copy the Organization Unique Name by selecting Settings, Customizations, Developer Resources
Select the Credentials button, enter your CRM online credentials, select OK and Next
At this point your credentials are verified and the Query Designer screen will open. One of the easiest ways to add a query to the report is to open CRM Online and build an Advanced Find query, as your base, and select the Download Fetch XML button from the Ribbon menu.
Select the Save file option, save the xml file to your hard drive, open the saved file in Notepad and copy and past the XML in the Query Designer screen.
Now that you have your base query, you can tweak it as need to pull the desired data from CRM. Select the Next button when you are satisfied with your query, select the desired Report type and select Next.
Add the fields to your report and select Next
Select a Report Style and select Next
Give your report a Name and select Finish
You can now add any finishing touches to the report like parameters, design changes etc. When finished with all your changes you can upload the new report to CRM and make it available to the Organization for use.