in External Data Types Creating Using Business Data Connectivity Services
this error coming because of , External System not getting proper identity to connect. thus if you change the Business Data Connection Authentication mechanism to BDC Identity it will work.
But sometimes you might get following error message when you going to change the Authentication method to BDC Identity.
To Overcome this message you need to run following Power Shell Scripts in Administrator Mode.
First you need to get the list of running services.
PS > $apps = Get-SPServiceApplication
Then you need to get the correct item from this collection. In here you can use pipe ( | ) operation or you can simply increase the element Id and look what is the element is. $apps , $apps … In my case it is 15. but this may differ.
then you need to update the RevertToSelfAllowed to true. Following commands will do it.
PS C:\Users\shpdevadmn> $apps.RevertToSelfAllowed = $true
PS C:\Users\shpdevadmn> $apps.Update()