Connecting to ArcSDE 10.2.1 using ArcObjects

Hello all,

I developed a standalone application using Arcobjects 10.1 . I used property set to open the workspace as shown below

IPropertySet propertySet = new PropertySetClass();
propertySet.SetProperty("SERVER", server);
propertySet.SetProperty("INSTANCE", instance);
propertySet.SetProperty("DATABASE", db);
propertySet.SetProperty("USER", user);
propertySet.SetProperty("PASSWORD", password);
propertySet.SetProperty("VERSION", version);


Type factoryType = Type.GetTypeFromProgID(
"esriDataSourcesGDB.SdeWorkspaceFactory");
IWorkspaceFactory workspaceFactory = (IWorkspaceFactory)Activator.CreateInstance
(factoryType);
pWorkspace = workspaceFactory.Open(propertySet, 0);

Now we have upgraded the arcsde to 10.2 . SQL Server 2012 has default instance . Now I am getting error saying "entry for sde instance not found in services file"

Is there a way to connect SDE using direct connect ? How to create ArcSDE Service ?

Thanks