Starbucks (NASDAQ: SBUX) has decided it can build better software than Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM).
If nothing else, it wants to save costs with a homemade version of some high-priced enterprise software platforms
That is either visionary cost-cutting or a case study in corporate hubris waiting to happen. According to an internal Starbucks presentation reviewed by Bloomberg News, the coffee chain is developing AI-powered tools to replace a Microsoft inventory-tracking system and an IBM maintenance management platform. Starbucks spends about $400 million a year on software, and Chief Technology Officer Anand Varadarajan told employees there are “clear opportunities to reduce the spend.” The market took notice.
Microsoft fell 2.4% and IBM dropped 5.2% as the Bloomberg article was published on Thursday morning. Starbucks rose more than 3% on the potentially cost-saving news. Toast (NYSE: TOST) shares enjoyed a short-lived 2.3% spike at the same time.