To set up the extension application, you have to configure the connectivity from the subaccount in SAP BTP to the SAP S/4HANA Cloud tenant.
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When configuring the extension application, you have to set up the connectivity from the subaccount in SAP BTP where you will deploy this extension application to the SAP S/4HANA Cloud tenant. To do that, you can use different authentication methods: Basic, Client Certificate, or SAML Bearer Assertion.
See Configure the Extension Applications's Connectivity to SAP S/4HANA Cloud.