On the SQL Server you must enable TCP/IP Remote Connections

After changing the setting you must restart SQL Server service for it to take effect

When installing Management Utilities instead of entering the SQLinstance name enter the Server Name that is running the SQL

example below shows connecting to the SQL Server called Z240-2008R2 using the default instance name

**PLEASE NOTE - to define the SQL Instance name type the instance name after the server name - example Z240-008R2\syam

After installation has completed go to Services and change to run the Management Utility as a Domains user that has SQL Administration rights.

Finally go to IS Administration and Change the IIS Application Pool - Select Classic .Net and choose the Advanced Settings on the right hand menu.

Select Identity and press the button next to Local System to change it.

Choose Custom Account and press the Set button

Enter the Domain Username and Password that has administrative rights to the Server running the SQL database instance you are remotely connecting to.

Press Ok and apply change - you do not need to reset IIS.