This is a known limitation — the License Usage Summary report in System Administration → Security Governance is only available for Microsoft-managed cloud environments. On-premises environments do not have access to this report.
For on-premises D365 F&O license analysis the alternative approach is a two-source reconciliation:
Source 1 — User License Count report: System Administration → License Information → User License Counts — shows the license tier each user currently requires based on their highest-privileged menu item in their assigned roles.
Source 2 — Assigned licenses in your volume licensing portal or EA agreement — shows what you are contractually paying for.
Comparing these two sources identifies over-licensed users (paying for more than needed) and under-licensed users (compliance risk).
For a complete methodology covering on-premises license reconciliation and SoD governance — sajeedmullaji.com
Hope this helps.
