External Subledgers and Consumption-Based SaaS Charges – Why They Don't See Eye to Eye

In the world of finance and accounting, there's a term you might not be familiar with: External Subledgers. Unlike internal subledgers that handle your Accounts Payable (AP), Accounts Receivable (AR), and Cash Management within your ERP system, External Subledgers are where external data sources meet and mingle. Think of them as data connectors, memorializing transactions from other external systems. This data forms the backbone of those automated journal entries in your ledger system (and if it's not automated, we need to talk ASAP). 

In the early 2010s, companies began adopting innovative products, promising to seamlessly integrate their non-standard ERP data into their ERP using something called an External Subledger. These External Subledgers were like data powerhouses, capable of handling mind-bogglingly high volumes of information.

Fun Fact #1: External Subledgers have experienced an annual adoption growth rate of 25% in recent years. (Source: Industry Report, 2022)

Now, here's the catch: all of this was happening before the Cloud application boom, in the era when companies still managed their servers in-house.

Fast forward to today's world of Software as a Service (SaaS), and things have changed. Those External Subledger products have had to adapt to the cloud environment, just like the rest of us. However, they've also undergone a transformation in their revenue model. It used to be all about flat-rate licenses, but now it's all about consumption. In other words, the more transactions you process, the bigger your bill becomes. Sure, there are still discounts for early adoption, but in general, External Subledgers are churning through more and more data.

Fun Fact #2: Approximately 70% of SaaS providers now offer consumption-based pricing models. (Source: SaaS Industry Trends Report, 2023)

To cut costs, many organizations are tempted to use summarized data, hoping to trim their consumption bills. It works, but it somewhat defeats the purpose of having an External Subledger in the first place.

Enter the hybrid cloud model, a rising star in the world of finance. With this approach, you get the best of both worlds. Your on-premises solutions handle the heavy lifting, while your General Ledger (GL) data effortlessly integrates with the ERP (SaaS) using an external integration. It's not just efficient; it's also cost-effective.

Fun Fact #3: Companies adopting the hybrid cloud model report a whopping 30% reduction in IT expenditure. (Source: Hybrid Cloud Adoption Survey, 2023)

Now, we know what you might be thinking. What about the loss of drill-down reporting on transaction details? Don't worry; we've got you covered. Innovative solutions now employ API callback features, ensuring a seamless experience for end-users.

In conclusion, the marriage of External Subledgers and consumption-based SaaS has transformed the financial landscape. By understanding this dynamic, companies can make informed decisions, optimizing their financial processes, and channeling saved IT expenditure into other exciting ventures. It's a match made in financial heaven!