The new value chain isn’t linear. It’s barbelled. Value concentrates at two extremes—the orchestration layer at the top and the proprietary data/context layer at the bottom—while the middle (UI-dependent workflow applications) gets squeezed. This is the SaaS — as explored in the shift from SaaS to agentic service models — Hourglass.
Tier 1: System of Action — Agent Orchestration (Highest Value)
The orchestration layer that understands intent, coordinates agents across systems, and executes outcomes directly. This is the new commanding height of enterprise technology.
OpenAI — as explored in the intelligence factory race between AI labs — Frontier’s architecture operates in three layers: Business Context, Agent Execution, and Evaluation & Optimization. The value capture mechanism is an “orchestration tax”—analogous to the App Store’s 30% cut. OpenAI, Anthropic (Claude Cowork), Microsoft (Copilot Studio), Salesforce (Agentforce), and Google are all racing for this position.
Tier 2: System of Intelligence — Evaluation, Optimization, Memory
The feedback loops that make agents improve over time. Whoever owns the definition of “what good looks like” controls quality, and therefore controls trust. Every evaluation, every optimization, every memory trace makes the system more effective. Switching costs are high because you can’t easily export years of accumulated performance data.
Tier 3: Agent Identity & Governance — The Sleeper Moat
Each agent needs an identity with explicit permissions, audit trails, and compliance boundaries. This sounds like infrastructure plumbing. It’s actually a strategic chokepoint.
The historical parallel is Active Directory. Microsoft didn’t win the enterprise PC market by making the best word processor. It won by controlling identity and permissions. Agent IAM follows the same logic. In five years, this may be the stickiest layer in the entire stack.
Tier 4: Dynamic Context Store — The Mutated System of Record
The system of record doesn’t vanish. It mutates. Static schemas designed for human queries become living context graphs designed for agent consumption. Records become traces of agent actions, not inputs for human navigation.
Tier 5: Traditional SaaS Applications — The Hollowed Middle
UI-dependent, seat-based, workflow-centric applications sit at the most vulnerable position. Traditional SaaS faces a three-way fork: become a pure data API, go agent-native, or try to become the orchestration layer itself. There is also a fourth path: decline.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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