Although you can edit the display names of any of your SmartObjects, it gets a little bit complicated if you want to change the name on the system level. When a SmartObject is created, it's name gets set in both the K2 SQL database as well as in its XML. Thus, if you need to change the system name of a SmartObject for any reason, the best way to accomplish this would be to create a copy of the SmartObject you wish to rename using the "Save As" button:
Once created, you can name this copy and create a new name for the SmartObject on the system side. To use this renamed copy in workflows and forms, simply update your K2 artifacts to use this new copy as a data source.
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Good Day EmilyChilders
Just wanted to add my input here as well.
Preforming a "Save As" on the SmartObject will effectively change the SmartObjects System name. However there is one issue with this, doing a save as on the SmartObject will also mean that the new SmartObject will not have any contentdata in it, therefore meaning that if the purpose was to rename the system name only all would be good, but if the purpose was to rename the system name of the SmartObject and not lose data in the process so that it can be used instead of the old one then the existing data would need to be moved over to the new SmartObject as the "Save As" will not tranfer the existing SmartObjects data to the saved as SmartObject.
To transfer your data from one SmartObject to another this KB article contains a step by step guide on "how to" do that.