Error creating this geodatabase. This application is not licensed to perform this operation

Error Message

With ArcGIS Server Workgroup, a workgroup geodatabase can be created using ArcMap and can be accessed by up to 10 users at a time. In some instances, when creating a workgroup geodatabase, the process fails and returns the following error:

Error:   
Error creating this geodatabase. This application is not licensed to perform this operation

Cause

The following are possible causes for this issue:

• The SQL Server instance version is not compatible with the installed ArcGIS version.
• The SQL Server instance is not authorized with an ArcGIS Server Workgroup license.

Solution or Workaround

Depending on the cause, select one of the options below to resolve this issue:

• Install a compatible version of the SQL Server instance. For more information, refer to System Requirements: Microsoft SQL Server database requirements for ArcGIS 10.6.
• Authorize the SQL Server instance with an ArcGIS Server Workgroup license. For the steps to do this, refer to ArcGIS Enterprise: Enable geodatabase storage. For information on updating a license key, refer to ArcGIS Enterprise: Update license keys for database servers and their geodatabases.