If you want to run the inbound web service application on premise, use the predefined IIS application.
You can use the IIS application to route external HTTP requests to the applicable inbound web service actions in D365 F&SCM.
Prerequisites
Before you set up the IIS application, make sure:
The on-premises server has Internet Information Services installed and .NET 4.6 (or higher).
A D365 F&SCM environment with Connectivity Studio installed runs in the cloud or on premises.