Service Manager doesn't like the default collation method (SQL_Latin1_General_CP1_CI_AS). If your SCSM SQL server is running with that collation mode you will get a warning when you install SCSM.
If you continue Setup using the default collation (SQL_Latin1_General_CP1_CI_AS), you will not be able to support multiple languages in Service Manager. In the future, if you decide you want to support multiple languages, you will have to re-install SQL Server.
The collations in the following table represent the approved collations that were tested.