What AI Does to the 75/25 Split — and to Your Margin

I argued elsewhere that AI automates the deployable three-quarters of identity work and barely touches the operational quarter. That's a thesis about responsibility. Here's the same shift read off a P&L, because for an MSSP it's not abstract — it's where your margin is about to move, and whether it moves toward you or away from you depends on what you sell.

What gets commoditized gets unbillable

Start with a hard rule of services pricing: you can only charge for what's scarce. The moment something becomes cheap and easy to produce, its price falls toward the cost of producing it, which is heading toward zero.

AI is doing exactly that to the deployable 75 — standing up the IdP, wiring integrations, writing connectors, scaffolding policy. That work is getting fast and cheap in front of us. Which means if your revenue is anchored to deployment — "we set up and configure identity" — you are billing for the thing whose price is collapsing. Your competitor with AI tooling will quote it for a fraction, and the floor keeps dropping. Deployment is becoming table stakes you can't charge a premium for, the way nobody pays a premium to have a website "installed" anymore.

What resists automation keeps its value

Now the other side. The operational 25 — continuously holding posture, governing the exploding population of non-human and AI identities, being accountable when it's wrong — doesn't commoditize, because it's contextual, judgment-laden, and per-client. It stays scarce. Scarce work keeps its price.

So the value in identity is migrating from the part AI eats to the part it can't. The deployable layer is racing to zero; the ownership layer is where margin concentrates and, because AI is manufacturing more non-human identities to govern, actually grows. The total pie may even expand — there's more identity to operate than ever — but the profitable slice is moving, decisively, from "deploy" to "own."

The squeeze, and who feels it

This produces a clean fork for MSSPs:

If you price on deployment, you get squeezed. Your billable work is commoditizing under you, your quotes have to fall to stay competitive, and the part that's still valuable you're probably giving away for free. Falling price on the billed work plus unbilled value on the valuable work is margin compression from both ends.
If you own the mile, you ride the shift up. The work you're positioned to charge for is the work whose value is rising. AI becomes leverage — it makes the cheap part cheaper for you too, freeing your people for the operational quarter that clients actually pay a premium for.

Same market, same technology, opposite outcomes — and the only variable is which side of the 75/25 line your revenue sits on.

What to actually do about it

Stop anchoring price to deployment. Treat setup as a near-free on-ramp — because that's what it's becoming — and move your margin to the recurring operation.
Build the SKU for ownership. Price continuous posture ownership as the premium, recurring service it is; that's the slice whose value AI is raising.
Use AI to cut your cost on the 75, not to compete on it. Let it commoditize deployment for you, and redeploy the saved hours into the 25 where margin lives.
Get efficient at the operational quarter. Its value is rising, but it only becomes margin if you can deliver continuous ownership cheaply per client. Efficiency there is the whole bet.

The takeaway

AI is turning the deployable three-quarters of identity into a commodity, which means if that's what you bill for, your margin is evaporating on schedule. The value is moving to the operational quarter — the part that doesn't automate and that's growing as AI spawns more identities to govern. The MSSPs who come out ahead aren't the ones who resist the automation; they're the ones who let it commoditize deployment while they move their pricing, and their attention, to owning the mile. That's where the money is going. Get there first.

Making continuous ownership of that operational quarter efficient enough to be your margin line — while AI commoditizes the rest — is precisely the bet behind Aurelion. If you're rethinking where your identity revenue should sit, I'd like to compare notes.