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Key Takeaways Starbucks spends about $400 million every year on software alone, according to chief technology officer Anand Varadarajan.
The coffee chain is now developing software tools in-house as part of its broader turnaround strategy to cut $2 billion in costs.
Starbucks buys products from companies like Microsoft and IBM, spending hundreds of millions of dollars on software alone — but not for much longer.
A leaked internal presentation recently reviewed by Bloomberg News showed that Starbucks is developing its own in-house alternatives to software offerings it usually purchases from tech giants. The coffee chain is creating its own solution to a Microsoft system that monitors inventory, as well as an IBM product that oversees maintenance.
Bloomberg noted that Starbucks could roll out some of this internally developed software by the end of 2027, depending on how well the tools perform in tests.
The outlet said that businesses like Starbucks were tied to technology vendors for years because of the complexity of building tools and the disruption caused by changing software. Now, AI is transforming the landscape by making it simpler to create software from scratch.
Starbucks is aiming to cut $2 billion in spending
Starbucks’ chief technology officer, Anand Varadarajan, disclosed in a meeting earlier this year that the company spends about $400 million just on software. “There’s clear opportunities to reduce the spend,” Varadarajan said, per a meeting recording seen by Bloomberg.
Building custom software in-house can help reduce costs. Starbucks wants to cut $2 billion in spending as part of an overall turnaround strategy. However, creating software can also lead to steeper maintenance and labor expenses down the road.
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