You should start this process by making a copy of your current PowerStore database. Once you have done that you can add the new PowerStore to a sub directory and run the installation. During the installation make sure to choose the copy of the db.
You will also need to run a script to update the PowerStore 2 products to work in PowerStore3, here is a link to the page with more info:
When it is all setup you should make a copy of your current PowerStore 2 files, then move the PowerStore 3 files to the root of the site and test it out.