Starbucks spends $400 million a year on software — now it's using AI to build its own and cut out the middleman

Starbucks spends $400 million a year on software — now it's using AI to build its own and cut out the middleman Brian O’Connell Thu, July 16, 2026 at 5:30 PM GMT+2 5 min read SBUX MSFT IBM Sorbis/Shutterstock Starbucks is taking its software development in-house and replacing it with AI tools that the company bets can replace traditional software applications, resulting in significant cost savings, a leaked internal presentation reviewed by Bloomberg reported (1). The pivot could rock the C-suites at big software companies like Microsoft and International Business Machines Corp, both of which have sold software systems to the Seattle-based specialty coffee retailer. Currently, Starbucks spends approximately $400 million on software, fulfilling a promise from chief technology officer Anand Varadarajan, who said earlier this year that Starbucks had "clear opportunities to reduce the spend" on its software operations.

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2% within 24 hours of the report. Meanwhile, Starbucks shares climbed by 3% and are up 25% year-to-date. Additionally, there's a rising buzz on Wall Street that Oracle's Simphony point-of-sales software system, long used by Starbucks, may also be on the chopping block (2).

The leaked report also noted that Starbucks leadership is examining "every contract and service," which includes a new point-of-sales system being developed in-house that would replace the Oracle system. Starbucks engineers are reportedly deploying AI-powered coding tools to build custom software faster and cheaper. According to the Bloomberg report, Starbucks expects to save $30 million in 2026 on enterprise technology spending and save $10 million on software spending alone.

The coffee giant expects to launch a new inventory tracking and maintenance management system to replace its Microsoft and IBM software in late 2027, the leaked report noted. Big software developers have reason to worry, but it's not all bad news Technology industry experts say the Starbucks move signals a major shift away from enterprise software vendors. "It's cost-cutting on the surface and an ownership shift underneath," Debbie Madden, founder at Stride, a New York City-based agentic AI consulting and software engineering firm, told Moneywise.

Story Continues For the past two decades, big companies have opted to buy software from companies like Microsoft, IBM, and Oracle because the cost of building a system in-house and hiring dozens of software engineers has been prohibitive. Now, AI is changing that equation. "That default is gone," Madden said.

"The line between what you build and what you buy has moved, and Starbucks noticed early. " Yet talk of the end of enterprise software systems is premature. "Companies will keep buying infrastructure, payments, and anything where compliance is the product," Madden noted.

What's changing now is the middle of the software stack, especially inventory tracking, maintenance management, and internal workflow tools. 'This is software that encodes how your specific business runs," Madden added. "That's what companies will increasingly own and build themselves.

" Read More: Are you paying too much for car insurance? Here are 3 clever ways to slash your monthly bill Software is still in growth mode despite AI's ascent While talk of AI replacing traditional computing systems expands, the software sector remains robust. The global software market size is pegged at $921.

14 billion in 2026, and is estimated to rise to $2,468 billion by 20235, indicating a 11. 6% compound growth rate over that time period, according to Precedence Research (3). "The global software market is emerging as a high-growth investment opportunity, driven by accelerating digital transformation, rapid cloud adoption, and rising cybersecurity requirements across industries, Precendence reported.

"The growing digitalization of operations and the rise in cyber threats also drive software market growth. Yet the days of relying on big software systems developers for all of a company's technology development needs look like they're waning, if gradually. "This is less a stampede away from enterprise vendors and more a predictable unbundling, and Starbucks is a leading indicator, not an outlier," Suleman Siddiqui, chief strategy officer at Virginia-based Sthenos Technologies, told Moneywise.

Big software packages were needed when building custom software required a large, slow engineering effort, so buying a general-purpose system from Microsoft or IBM was the only option. "That was the rational default even when it fit your actual workflow at maybe 70%," Siddiqui said. "Now, AI collapses the cost of building the missing 30%, so the calculus flips for any workflow that is core, high-volume, and specific to how you operate, which is exactly what inventory tracking is at Starbucks scale.

" Siddiqui said companies will keep buying software commodity systems in which their processes are not a differentiator, such as payroll, email, and general ledger. Yet those same companies will increasingly build the operational workflows that are their competitive edge, rather than having a generic tool force someone else's model of the business onto them. "The part the headline misses is the liability this creates," Siddiqui noted.

"Internally built, AI-assisted tools still have to be maintained, secured, and verified, and the licensed vendor product quietly absorbed all of that. Replace it, and you inherit it. " The firms that win the software shift will pair the build decision with the verification and ownership capacity to actually run what they build, while those that chase only software license savings will likely rediscover why software-as-a-service existed in the first place.

"My rule of thumb for CIOs weighing a Starbucks-like pivot is buy your commodity, build your edge, and budget for the fact that build means own," Siddiqui added. Article Sources We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines .

Bloomberg ( 1 ); PYMNTS. com ( 2 ); Yahoo Finance ( 3 ) This article originally appeared on Moneywise. com under the title: Starbucks spends $400 million a year on software — now it's using AI to build its own and cut out the middleman This article provides information only and should not be construed as advice.

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