Starbucks Builds Internal AI to Replace $400M in Software — Microsoft, IBM, and Oracle in the Crosshairs

Starbucks is developing internal AI tools to replace enterprise software from Microsoft, IBM, and potentially Oracle, aiming to cut $30 million from its enterprise technology budget this year alone.

According to a Bloomberg report covered by Storyboard18, Starbucks CTO Anand Varadarajan has told employees the company spends around $400 million annually on software — and sees substantial room to reduce that figure. The company is using AI-assisted coding to build alternatives to Microsoft's inventory management platform and IBM's maintenance management software. Initial deployments could begin by end of next year, pending testing.

Key Takeaways

• Starbucks is targeting a $30M technology budget reduction this fiscal year, with $10M from lower software spending and $13M from reducing reliance on outside contractors
• The company is establishing engineering hubs in Nashville and India to support its internal software development initiative
• Challenges remain — Starbucks recently discontinued an AI-powered inventory tracking system after testing and returned to manual stock counting

The strategy is part of Starbucks' broader effort to reduce total costs by $2 billion. While in-house development can lower licensing costs over time, the company will also need to manage ongoing maintenance and staffing costs associated with systems it owns. The company is also reviewing its Oracle Simphony point-of-sale contract as a candidate for internal replacement.

Read the full article on Storyboard18