Starbucks Expands Internal AI Development
Starbucks Corp. (NASDAQ:SBUX) is reportedly developing artificial intelligence-powered software that could replace several enterprise applications currently supplied by Microsoft Corp. (NASDAQ:MSFT) and International Business Machines Corp. (NYSE:IBM), according to a Bloomberg report citing an internal company presentation.
Among the projects under development are replacements for Microsoft’s inventory management software and IBM’s maintenance management platform. According to the report, some of the internally built applications could be ready for deployment by the end of next year, subject to successful testing.
Cost-Cutting Strategy Drives Technology Shift
The initiative forms part of Starbucks’ broader effort to streamline operations and reduce expenses.
Chief Technology Officer Anand Varadarajan previously told employees that the company spends roughly $400 million each year on software and sees significant opportunities to lower those costs.
“There’s clear opportunities to reduce the spend in software,” Varadarajan said.
Internal documents reviewed by Bloomberg indicate Starbucks is evaluating “every contract and service” across its technology operations as it works toward a wider target of cutting $2 billion in costs.
Artificial Intelligence Plays Central Role
Artificial intelligence-assisted software development has reportedly been instrumental in building the new platform designed to replace IBM’s maintenance management system.
The company has also encouraged employees within its technology division to make greater use of AI tools, with AI adoption reportedly becoming one of the factors considered in employee bonus evaluations.
Bloomberg also reported that Starbucks has spent several years developing its own point-of-sale platform to replace Oracle Simphony.
Budget Savings and Workforce Changes
The company’s enterprise technology division is expected to reduce its annual budget by approximately $30 million during the fiscal year ending in late September.
That includes an estimated $10 million reduction in software spending, along with roughly $13 million in savings through lower reliance on external contractors and professional services firms.
Starbucks is also expanding its technology footprint by establishing offices in Nashville and India, while continuing to maintain its headquarters in Seattle.
Since February of last year, the company has eliminated around 2,300 positions, including a significant number of technology-related roles.