In order to solve the issue, amend the Veeam ONE Monitor and Veeam ONE Reporter service credentials prefix to Domain\Username format:
1. Open Services snap-in on the Veeam ONE server;
2. Find the Veeam ONE Monitor Server service and open the properties;
3. Navigate to the Log On tab;
4. Update the credentials prefix to Domain\Username format;
5. Restart the service to apply the changes;
6. Perform the same steps for Veeam ONE Reporter Server service;
7. Install the Update.