Leveraging IN-DB connections is a two-step process:
1) you need to create a local, user-type IN-DB connection to build your workflows with in Designer.
2) you need to create a local, system-type IN-DB connection on the Alteryx Server. It must have the same name as your user-type connection.
When your workflow runs on the Alteryx Server, it will look for connections local connections by connection name. If it finds one, then your workflow will execute properly. If there is a slight difference between the names, it will fail.
It's also important to make sure your connection strings are identical to avoid any issues that could present.
Note: system-type connections are only available for creation if you run Designer as an Administrator.