Start at Honrich Tower Wayshrine and follow the road going southwest. It will lead you straight to the Avanchnzel public dungeon entrance. Before the entrance turn right towards the stone pillar illuminated by a torch in the ground. There is also a quest giver lying on the ground in the middle of the passage between two huge rocks. The skyshard is on the half-buried stone table, next to a broken stone pillar. The Dwemer Inquiries Volume II lorebook is next to it as well.
Southern Rift, southwest of Honrich Tower Wayshrine.