The Hollowed Middle: Why Traditional SaaS Applications Are Most Vulnerable

UI-dependent, seat-based, workflow-centric applications sit at the most vulnerable position in the new agentic value chain. If your differentiation is navigation, dashboards, and workflow templates, you’re in the most exposed position.

The Agent Bypass

Frontier’s architecture makes the threat explicit: AI coworkers are “accessible and useful through any interface, not trapped behind a single UI or application.” The agent operates through whatever channel is most efficient. The SaaS — as explored in the shift from SaaS to agentic service models — application’s UI becomes one optional delivery channel among many, not the product itself.

The Three-Way Fork

1. Become a pure data API: Lose UI value, keep data value, accept lower margin but retain structural relevance
2. Go agent-native: Deeply embed agent capabilities to gain orchestration value
3. Become the orchestration layer: ServiceNow’s McDermott claims his products serve as “the semantic layer that makes AI ubiquitous.” Salesforce’s Benioff argues Agentforce’s data access makes it the natural orchestration point. Both are bids to escape the hollow middle

There is also a fourth path: decline. Companies that neither own differentiated data nor build toward orchestration gradually lose relevance as agents route around their interfaces.

The Quiet Killer

The quiet killer isn’t agents replacing software next quarter. It’s that AI reduces the headcount that uses the software. If 10 agents do the work of 100 people, you need 10 seats, not 100, even if the software persists. Per-seat economics determine whether the application survives.

This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.