Starbucks is developing artificial intelligence-powered software designed to replace some enterprise applications it currently licenses from Microsoft and IBM, marking the coffee chain’s latest effort to cut technology costs and modernize its operations through AI.
According to an internal company presentation reviewed by Bloomberg, Starbucks is building in-house alternatives to a Microsoft inventory management system and an IBM maintenance platform. The company believes AI can accelerate software development while reducing its reliance on third-party enterprise vendors.
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Chief Technology Officer Anand Varadarajan told employees that Starbucks spends roughly $400 million annually on software and sees significant opportunities to lower that expense by developing its own AI-assisted applications. The company is targeting broader cost reductions as part of CEO Brian Niccol’s turnaround strategy.
The internally developed tools are expected to automate operational functions that currently depend on commercial software, including inventory tracking and equipment maintenance. If testing proves successful, some of the AI-powered applications could begin rolling out by the end of 2027.
The initiative reflects a broader shift across corporate America, where companies are increasingly using generative AI not only to improve productivity but also to replace expensive software subscriptions with customized internal systems.
The move comes despite Starbucks’ mixed experience with AI. Earlier this year, the company discontinued its “Automated Counting” inventory system across North America after determining the technology produced inaccurate stock counts and failed to deliver consistent operational improvements. The AI-powered tool, developed with Seattle-based startup NomadGo, was retired less than a year after its rollout.
At the same time, Starbucks continues to expand other AI initiatives. Its “Green Dot Assist” virtual assistant, built on Microsoft’s Azure OpenAI platform, is being tested to help baristas quickly access drink recipes, troubleshoot equipment issues, suggest ingredient substitutions and assist store managers with staffing decisions. The company has said the chatbot is intended to support employees rather than replace them.
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Under Niccol’s “Back to Starbucks” transformation plan, the company has focused on improving operational efficiency while simplifying store operations and reducing costs. Building proprietary AI software could allow Starbucks to tailor applications specifically to its business while lowering long-term licensing expenses.
The strategy also highlights a growing trend among large enterprises seeking to use generative AI to develop custom business software, potentially reducing dependence on established technology vendors such as Microsoft, IBM and Oracle. If successful, Starbucks’ approach could become a model for other retailers looking to balance AI innovation with operational savings.