Answer
Run the following as a one-time database-level grant: BEGIN Prepare_SYS.Dbagrant('<Application Owner>', 'Y'); END; — this grants the Application Owner account the underlying Oracle ALTER USER system privilege, which is a database-level privilege separate from anything configured through IFS permission sets or user-management grants. After running it, refresh the Security Cache through the application's Refresh Cache window — and remember to refresh Security Cache again after any future change to user permission sets or grants, not just this one.