Starbucks Puts Tech Giants on Notice with AI-Driven Software Rethink

Starbucks is rethinking its $400m annual software spend by testing AI-assisted coding to build business applications in-house. This move has put pressure on Microsoft, IBM, and Oracle contracts as the coffee giant aims to gain greater control over technology that determines customer experience.

The company's personalised drinks, loyalty offers, delivery growth, and expanding mobile orders create operational demands that must be absorbed by its point-of-sale, inventory, maintenance, staffing, and queue-management systems. Starbucks is developing alternatives to Microsoft's inventory system and IBM's maintenance product, with some applications expected to be introduced by the end of 2027.

This development follows other companies like Cloudflare and Klarna, which have successfully implemented agentic AI to cut software costs. However, experts caution that many companies lack the engineering capability, governance, and maintenance resources to follow suit. Klarna's hybrid approach, where human agents are reintroduced for nuanced support while retaining AI for routine tasks, is seen as a more viable model.

Starbucks' chairman and CEO, Brian Niccol, did not address the issues directly in its earnings call but spoke generally about the role of technology in improving execution and customer experience. The company aims to generate $2 billion in savings over two years as part of Niccol's turnaround program.