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

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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The Bloomberg story resonated on Wall Street, with Microsoft shares sliding by 2.4% and IBM losing 5.2% 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.

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.

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."

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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).