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We've on-pre Microsoft Dynamics CRM Workgroup Server 2011 and we're planning to upgrade it by purchasing 5 more CALs.

Could anybody suggest what are steps/precautions I've to take ?

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  • Backup your existing server.
  • Start with a fresh install of 2011
  • Use the Import Organization Wizard

This preserves your existing server while allowing you to test the migration to the new server.

You might give this a look. It is a PDF published by the CRM User Group:
http://www.crmug.com/events/crmugdayone2012upgrading.pdf