Groups and Sites option is disabled with E3 license

Hi There,

When creating sensitivity labels, I see "Groups and Sites" option is disabled with E3 license. Is there a specific license needed for Groups and Sites? 

Following is what I see in Purview portal documentation, wondering if Microsoft Entra Id needs to be created as part of below steps or not needed? ( currently we do not have a Microsoft Entra Id). 

https://learn.microsoft.com/en-us/purview/sensitivity-labels-teams-groups-sites?view=o365-worldwide#how-to-enable-sensitivity-labels-for-containers-and-synchronize-labels

How to enable sensitivity labels for containers and synchronize labels

If you haven't yet enabled sensitivity labels for containers, do the following set of steps as a one-time procedure:

1. Because this feature uses Microsoft Entra functionality, follow the instructions from the Microsoft Entra documentation to enable sensitivity label support: Assign sensitivity labels to Microsoft 365 groups in Microsoft Entra ID.

2. You now need to synchronize your sensitivity labels to Microsoft Entra ID. First, connect to Security & Compliance PowerShell.

   For example, in a PowerShell session that you run as administrator, sign in with a global administrator account.

3. Then run the following command to ensure your sensitivity labels can be used with Microsoft 365 groups:

   PowerShellCopy

    

   Execute-AzureAdLabelSync

Wondering if anyone has resolved above issue, could you please provide the fix or step by step solution?

Upon researching further, I see following article to resolve this issue, but it does not specify if Microsoft Entra Id needs to be created before executing steps or not needed? If anyone, has resolved the issue following this article, could you confirm and if it worked?

https://arashaghajani.com/blog/how-to-enable-m365-groups-teams-and-sharepoint-sites-option-in-sensitivity-labels-in-microsoft-purview/

Thanks!