Starbucks Corp. is developing internal tools using artificial intelligence that could replace some software applications the company currently uses from companies like Microsoft Corp. and International Business Machines Corp. buys.
The coffee chain is developing alternatives to a Microsoft system to track inventory and an IBM tool to manage maintenance, according to an internal presentation seen by Bloomberg News. Some of the software Starbucks is developing could hit the market by the end of next year, pending test results.
For years, companies were tied to their technology providers due to fear of business disruption and the complexity of developing internal tools. Now AI is changing that calculus as it makes it easier to develop applications from the ground up and companies push their employees to use the technology.
Leading software companies are increasingly concerned about whether they can use AI to meet competition from startups or their own customers. This phenomenon has weighed on software stocks this year, with both Microsoft and IBM underperforming the S&P 500.
Shares of both companies fell in premarket trading Thursday, with Microsoft down about 1.5% and IBM down 4%.
Starbucks spends about $400 million a year on software alone, Chief Technology Officer Anand Varadarajan told employees in an internal forum earlier this year. “There are clear opportunities to reduce software spending,” Varadarajan said, according to a recording of the meeting reviewed by Bloomberg News.
In-house software can be cheaper, which is an incentive for companies like Starbucks that want to save $2 billion in costs as part of a broader turnaround effort. However, in the long run, construction can result in a business having to pay higher maintenance and labor costs.
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When it comes to technology, the company checks “every contract and every service,” it says in the presentation. In some cases, this also includes developing products to replace software that engineers already have to heavily adapt.
Starbucks has been working for several years on building a point-of-sale system to replace Oracle Simphony, according to people familiar with the matter who were not authorized to speak publicly.
The coffee chain declined to comment. In a blog post earlier this year, the company said AI and other technological advances will support its long-term growth and allow baristas to focus more on customer service.
Spokespeople for Microsoft, IBM and Oracle did not comment.
AI-assisted coding was key to developing the platform that could replace the IBM tool, the internal presentation said. As Bloomberg News reported, Starbucks is pushing its engineers to use artificial intelligence and even factors its use into its bonuses.
There is skepticism about how much or how quickly AI can speed up and automate work. Starbucks recently rolled out an AI-powered in-store inventory tracking system and switched back to manual counting. In addition, third-party software continues to be used, including from companies such as Microsoft.
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According to the internal presentation, Starbucks’ corporate technology team is on track to cut its budget by about $30 million in the fiscal year ending in late September. This includes cutting software spending by around $10 million.
Another $13 million will be saved primarily by reducing the number of contractors from professional service companies and filling some positions with our own staff. Starbucks is setting up offices in Nashville and India to house some technicians while others remain at its headquarters in Seattle. The company has cut around 2,300 jobs since February last year, including many in technology.
https://fortune.com/2026/07/09/starbucks-to-use-ai-to-replace-microsoft-ibm-software/
