ActiveControl is typically installed in a productive Solution Manager system. It does not need to be the Solman system, it can be any ABAP SAP system with high availability.
For more information on installing ActiveControl, please refer to seperate online Administration Guide documentation.
SmartRetrofit has two components:
1. A backend appliance which is Java-based application hosting the merge features
2. ABAP components that needs to be installed in the source and target systems under dual maintenance and a central component that is typically installed in Solution Manager.
smartRetrofit will be integrated with ActiveControl for transport management, change deployment ,sequencing of transports etc during the Retrofit process.
There is no requirement that smartRetrofit be installed in the same system that is acting as the ActiveControl Controller, however the general recommendation would be that both should be on the same SAP system, to reduce the risk of errors within the Integration.