@Henry Zhang Thanks for your patience. I had a discussion internally and confirmed that this is Bug in the standard V2 APIM.
If APIM with Standard V2 tier is integrated with a VNET, users are NOT able to perform service management operations, including adding/removing service tags, enabling/disabling developer portal and adding/removing custom domains. And it will fail with an error similar to the following: System.InvalidOperationException: service '/subscriptions/xxx/resourceGroupsxxx/providers/Microsoft.ApiManagement/service/servicename' is not ready.
Workaround:
You must remove your service from VNET, perform the desired operations such as publishing the portal, enabling system managed identity and add service back to VNET. This is a preview SKU and is expected to have some problems. We expect to fix this issue over the next couple of months.
Do let me know if you have any queries.
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