Shares in IBM, ServiceNow and Salesforce fell in premarket trading on Thursday after reports that Starbucks is developing artificial intelligence-powered software in-house, potentially replacing applications it currently purchases from external technology providers.
IBM shares were down about 3 per cent before the opening bell, while ServiceNow fell 3.5 per cent and Salesforce declined 4 per cent as investors reacted to the report.
According to Bloomberg, citing an internal company presentation, Starbucks is building its own alternatives to a Microsoft inventory management system and an IBM maintenance management tool. Some of the internally developed software could be deployed by the end of next year, subject to successful testing.
The move forms part of the coffee chain’s broader strategy to reduce technology spending and improve operational efficiency through AI.
Bloomberg reported that Starbucks spends approximately 400 million US dollars annually on software.
During an internal meeting earlier this year, Chief Technology Officer Anand Varadarajan reportedly told employees there were “clear opportunities to reduce the spend in software”, according to a recording reviewed by the news organisation.
The report also indicated that Starbucks is reviewing every software contract and service as part of a wider initiative to reduce costs by 2 billion US dollars.
In addition, the company is said to have been developing a new point-of-sale system for several years to replace Oracle Simphony, a widely used hospitality management platform.
Internal documents cited by Bloomberg further showed that Starbucks’ enterprise technology division is on course to reduce its budget by around 30 million US dollars in the current fiscal year ending in late September. The planned savings include approximately 10 million US dollars in software expenditure.
The developments have intensified concerns across the software industry that advances in artificial intelligence will enable companies to build customised applications internally rather than rely on third-party software vendors.
The latest report adds to growing investor unease over the impact of AI on traditional software providers, as businesses increasingly explore proprietary AI-driven solutions to lower costs and reduce dependence on external platforms.
