Starbucks Replaces Microsoft and IBM with In-House AI Tools

SBUX is developing its own AI-assisted software to replace commercial applications it currently licenses from MSFT and IBM, according to reporting that cites Chief Technology Officer Anand Varadarajan. The company spends roughly $400 million a year on software and sees room to lower that bill by building internal tools, per the same reports.

The initial targets are specific: an AI-built alternative to a Microsoft system that tracks store inventory and an IBM tool that manages equipment maintenance. AI-assisted development has reportedly accelerated construction of the IBM maintenance-tool replacement. The effort sits inside CEO Brian Niccol's broader turnaround, which is targeting about $2 billion in cost cuts. It also follows Starbucks' 2025 Green Dot Assist barista copilot, which was built on Microsoft's Azure OpenAI platform, so the company appears to be selectively insourcing where it sees savings rather than exiting Microsoft wholesale.

The ~$400 million figure is an annual software-spend target rather than a booked saving, and management reportedly framed a possible rollout only by the end of 2027 if testing succeeds, so realization is multi-year and execution-dependent. Points to watch: whether Starbucks can capture and sustain savings without offsetting internal engineering and support costs, the read-through for Microsoft and IBM enterprise revenue if large customers increasingly insource with AI, and Starbucks' own operating margins as the turnaround progresses. This is educational context, not investment advice.

Related Stocks

• IBM
• SBUX
• MSFT