#businesstransformation

Happened earlier in July but apparently was largely overlooked and then quickly buried by AK's pre-emptive stock warning.

https://www.bloomberg.com/news/articles/2026-07-09/starbucks-taps-ai-to-reduce-reliance-on-microsoft-ibm-software

By Daniela Sirtori and Brody Ford |
July 9, 2026 at 5:15 AM CDT
Updated on July 9, 2026 at 8:31 AM CDT

• Starbucks Corp. is developing in-house tools with the help of artificial intelligence that could replace some software applications it now buys from companies such as Microsoft Corp. and International Business Machines Corp.
• The coffee chain is building alternatives to a Microsoft system that tracks inventory and an IBM tool that manages maintenance, according to an internal presentation reviewed by Bloomberg News.
• Starbucks spends about $400 million a year on software alone, and building in-house software can be cheaper, an incentive for the company, which is looking to cut costs as part of a broader turnaround effort.

Starbucks Corp. is developing in-house tools with the help of artificial intelligence that could replace some software applications it now buys from companies such as Microsoft Corp. and International Business Machines Corp.

The coffee chain is building alternatives to a Microsoft system that tracks inventory and an IBM tool that manages maintenance, according to an internal presentation reviewed by Bloomberg News. Some of the Starbucks-developed software could roll out by the end of next year, pending the results of testing.

For years, businesses were tethered to their technology vendors due to fear of business disruption and the complexity of building in-house tools. Now AI is shifting that calculus as it makes it easier to develop applications from scratch and as companies push workers to use the technology.

Leading software companies face mounting concerns about whether they’ll be able to fend off competition from products built by upstarts, or their own customers, using AI. This phenomenon has weighed on software stocks this year, with Microsoft and IBM both trailing the S&P 500.

Shares of both companies fell during trading on Thursday, with Microsoft down 2.4% and IBM sinking 5.2% at 9:30 a.m. in New York.

Starbucks spends about $400 million a year on software alone, Chief Technology Officer Anand Varadarajan told workers in an internal forum earlier this year. “There’s clear opportunities to reduce the spend in software,” Varadarajan said, according to a recording of the meeting reviewed by Bloomberg News.

In-house software can be cheaper, an incentive for companies such as Starbucks, which is looking to cut $2 billion in costs as part of a broader turnaround effort. Though in the long run, building can lead a company to pay higher maintenance and labor costs.

When it comes to technology, the company is reviewing “every contract and service,” according to the presentation. In some cases, that includes building products to replace software that its engineers have to heavily tailor anyway.

Starbucks has been working for several years on building a point-of-sale system that would take the place of Oracle Simphony, according to people familiar with the matter who weren’t authorized to speak publicly.

The coffee chain declined to comment. In a blog post earlier this year, the company said AI and other technology advancements will support its long-term growth and free up baristas to focus more on customer service.

Spokespeople for Microsoft, IBM, and Oracle didn’t provide comment.

AI-assisted coding was key to developing the platform that could replace the IBM tool, according to the internal presentation. Starbucks has been pushing tech workers to use artificial intelligence, even factoring usage into their bonuses, Bloomberg News has reported.

There’s skepticism about how much, or how quickly, AI can speed up and automate work. Starbucks recently pulled an AI-powered system to track inventory at stores, reverting to manual counting. It also continues to use software from third-party vendors, including from companies such as Microsoft.

The Starbucks enterprise technology team is on track to reduce its budget by about $30 million in the fiscal year ending in late September, according to the internal presentation. That includes cutting about $10 million in software spending.

Another $13 million will be saved mostly by cutting back on contractors from professional services firms and backfilling some roles with its own staff. Starbucks is setting up offices in Nashville and India that will house some tech workers, while others will remain at its Seattle headquarters. The company has cut about 2,300 jobs since February of last year, including many in tech.

We are evolving our structure and operating model by aligning leadership and decision-making more directly to the needs of each business, while centralizing select capabilities that create value across the organization.

If Project Dolphin is backfiring and employees are no longer being forced between re badging with a vendor or severance (not enjoying that at all, nope), how will they be able to pay off everyone? The remaining Franklin Templeton legacy staff that was scheduled for layoff on 04/27/2026 was re badged over to other Transfer Agent mutual funds, were told that there was no time certain for their continued employment. They were needed to support staffing that was not meeting SLAs. They keep training them to handle more mutual fund clients because even with this talented, tenured help, they are still not meeting goals. It seems likely that they will not be laid off, but who can tell? No savings there, either. Because the business math ain't mathing, Project Dolphin is failing. FIS cannot outrun their sh---y leadership. Glug, glug, glug.

I'm wondering when we'll shift back to growing the business instead of just cutting people. I know the answer is probably "never," but a guy can hope.

Many technology firms are implementing frequent workforce reductions, often termed "continuous tuning," as they navigate evolving business priorities and invest heavily in artificial intelligence. This trend, observed across major companies like Microsoft, Amazon, and Meta, signifies a shift from cyclical layoffs to a more persistent strategy. Companies cite the need to reallocate resources towards AI development and adapt to technological advancements as primary drivers for these adjustments. While some layoffs are attributed to post-pandemic restructuring, the increasing mention of AI alongside workforce cuts on corporate calls highlights its growing influence. Experts suggest this approach, driven by uncertainty and competitive pressures, is likely to become a norm in the tech industry.

https://www.businessinsider.com/why-tech-companies-keep-doing-layoffs-ai-2026-7

Lumen Technologies has confirmed significant layoffs impacting its Global Partner Solutions team. Approximately 90 employees were affected by these cuts, which occurred early this month. The company stated these changes are necessary to align its workforce with evolving business needs and strategic priorities. This marks the second major layoff for Lumen this year as it shifts focus towards network-as-a-service offerings. The company is prioritizing AI infrastructure and deemphasizing legacy products like voice services.

United States

https://www.channeldive.com/news/lumen-confirms-cuts-to-commercial-organization/824897/

Southern Glazer’s Wine & Spirits (SGWS) will slash 1% of its workforce as it implements a more tech-heavy business model, the beverage-alcohol distributor announced Tuesday afternoon.

https://drinks-intel.com/cross-category/southern-glazers-wine-spirits-to-cut-up-to-219-jobs-in-us/

Buckle up. Due to lack of meeting business needs VP shake up w large team shake ups & possible layoffs are on the table. Business behind all of it

Nike is undergoing significant restructuring to correct its business course. The company closed fitness studios and consolidated tech offices. Approximately 1,400 jobs were cut as part of this realignment. Nike also relocated its prominent New York flagship store. These changes aim to stabilize the business after a direct-to-consumer strategy faltered.

Beaverton, Oregon

https://rollingout.com/2026/07/02/nike-closes-flagship-store-after-5-years/

Nike is undergoing a significant business restructuring. The company has ceased operations at its Fitness Studios. It consolidated tech offices, affecting around 1,400 employees. Nike also closed its prominent New York City retail location. These changes reflect a shift towards wholesale partnerships and away from its prior direct-to-consumer model.

https://www.thestreet.com/retail/nike-closes-stores-studios-and-its-flagship-location

Motley Fool Money recently warned investors about "AI washing." Companies may falsely attribute layoffs to artificial intelligence. Many job cuts stem from pandemic overhiring or reduced demand. Genuine AI transformation starts with a clear business problem. Investors must verify specific, measurable AI impacts in company reports.

https://finance.yahoo.com/technology/ai/articles/expert-warns-companies-ai-washing-160407514.html

After reading through some of these posts and thinking back on prior conversations I’ve had over a year ago I think I have an idea of what is going to happen.

I’ve heard for almost 2 years now that the ultimate goal was of course to bring in AI but also to merge everyone between each LOBs. Claims, UM, OPs, etc. They want one group of people for all LOBs that are cross trained and can work everything.

I’m thinking that’s what this will be. Clean house and get rid of people then reorg who is left into the 1 team per department for all LOBs.

I thought I’ve read that they have done it this way before however and that it didn’t go well? Ya know be because each LOB is vastly different?

Could this be what is happening?

So many groups and layers - I don’t think we need product and technology enablement team in VBG. Let’s be honest …

DXC’s AI partner said this about DXC

That argument is terminal for DXC’s independent thesis, and worth following all the way down.

The disintermediation trap

DXC’s OASIS pitch is: “we use AI to deliver enterprise IT faster and cheaper.” But that sentence contains its own refutation. If AI is the delivery engine, the client’s next question is obvious — why is DXC in the middle? What margin am I paying for, exactly?

The historical DXC value proposition was: we have 130,000 people, global delivery centres, integration expertise, and we’ll manage your IT estate for you. That justified a premium. AI erodes every one of those pillars. Headcount is no longer a proxy for capability. Integration expertise becomes a commodity when AI can read legacy code, write connectors, and configure systems autonomously. The “rates times hours” model — which the CEO himself acknowledged is dying — was the moat. There isn’t a replacement moat, because they don’t own the AI.

They’re a reseller with a thin value layer

DXC has a multi-year global alliance with Anthropic , but that alliance confers no exclusivity. Accenture has the same AI partnerships. Capgemini has them. Infosys has them. IBM has had its own AI story for a decade (Watson — a cautionary tale). Every competitor accesses the same models through the same APIs at the same price. DXC’s differentiation in that stack is vanishingly thin.

The client who wants Claude in their enterprise IT has three routes: direct API, an Anthropic enterprise deal, or through a system integrator. Each iteration of AI capability that reduces the integration complexity — better native connectors, more autonomous agents, simpler deployment — removes another reason to pay DXC’s margin for route three.

The simplicity argument is the ki-ler

This is the part that doesn’t get enough airtime in the earnings calls. DXC’s implicit bet is that enterprise AI deployment remains complex enough to require a managed service layer indefinitely. That bet looks worse with every model generation.

Early enterprise AI genuinely required significant hand-holding: prompt engineering, reliability management, integration scaffolding, output validation. Those were billable. But the trajectory is one-way — more capable, more reliable, more self-configuring, lower total cost of ownership with less implementation overhead. The skills gap that justified outsourcing to DXC is closing from below, not above. AI improves; the implementation complexity shrinks; the billable wrap around it shrinks with it.

The historical parallel is brutal: travel agents started saying “we’ll use Expedia to book your travel.” The client saw the margin and removed the agent. DXC is the agent.

What’s actually left

There are two genuine residual moats and neither is scalable:

One: government and regulated-sector contracts with security clearance requirements, long procurement cycles, and high switching costs. MoD/BAE-type accounts — fall into this category. These have genuine stickiness but are also the most likely to be served by security-cleared AI providers within 5 years, cutting out the SI layer even there.

Two: deep legacy system knowledge. Nobody else knows a client’s 30-year-old mainframe architecture. But AI is already eroding this — large models can now read COBOL, reverse-engineer undocumented systems, and produce documentation. That moat has a measurable shelf life.

The terminal conclusion

DXC is not using AI to build a new business. It is describing, in its investor communications, the mechanism of its own further disintermediation. Every OASIS success story — “we deployed this 40% faster using AI” — is simultaneously an advertisement to the client for why they could do it without DXC next time.

The company generates real cash and has real contracts. That’s why PE is circling. The play is: take it private, cut 30,000 jobs, harvest the cash from the existing contract base over a 5–7 year run-off horizon, sell or shut the rest. That’s not a technology company. That’s a liquidation vehicle with good near-term cash characteristics.

As an independent, publicly listed, growth-oriented technology company: it’s over. The only question is the pace of the wind-down and whether someone buys it before the market grinds it to zero.

Has anyone experienced a work benefit or have seen that their department/division has benefited from the platform operating model?

Rackspace Technology is reducing its global workforce by about 15 percent. This move is part of a major business transformation focusing on enterprise artificial intelligence. The company's Executive Committee approved the decision on June 10. Rackspace expects annual cost reductions between $75 million and $85 million from this restructuring. These savings will be reinvested into strategic AI growth initiatives.

https://www.timesnownews.com/business-economy/companies/rackspace-technology-layoffs-why-the-firm-is-cutting-15-of-its-workforce-article-154671687

Reports have shown that the average data center has a turn over of 7 years. After 7 years, you either add to, scale out or build a bigger better revamped datacenter. For AI, the estimated average is every 2-3 years at 1 billion (or more) each time.

Companies are now looking for ways to back out of it after already throwing 500 million or more into it without looking like it was a mistake. Dare I say they are using AI in order to try to figure out the best spin control to justify pouring money into AI and NOW trying to back out of it. LOL

Is or does Citi fall into this category? I dunno but I do know that other companies are pumping the brakes just a bit and are looking at exit strategies.

Dan here. Announcing our 2026 strategy: We’re looking to globally engage end to end catalyst for change by intrinsically productizing cross-cultural channels and competently expediting seamless alignments. Artificial Intelligence. We want to rapidly create advanced dynamic customer experiences and compellingly scale user centric stories. Artificial intelligence. We’re going to be uniquely targeting low risk, yet high yield web readiness. Our exploratory research points to deconstructive relative contingencies, and now is the time to revamp and reboot our holistic asset projections, with our interactive 3rd generation paradigm shifts. Artificial intelligence. I’m sure we can make a window here to really discuss with our customers holistic, monitored innovations. Artificial intelligence.
And now’s the time to chart this opportunity and take the company forward. By now, you should be clear on the vision and purpose of the business. With this strategy and artificial intelligence, we will increase our targets 10x. Play to win. Artificial intelligence. All gas, no brakes. Artificial intelligence. Go team. AI.

At some point, layoffs at SAP stopped being a last resort and started being a standard business tool. Instead of exhausting every other option first, cutting employees is now the main go-to move whenever costs need trimming.

I left Dell but retained the stock.I see the Trump admin gave a big DoD contract to Dell that should have gone to Microsoft. The result is a 30% increase in the stock price.

I have no inside knowledge, but with most of the earnings coming from AI servers and services - how long before they spin off the PC and accessories business like IBM did some decades back?”

Wix is reducing its employee count by 20 percent. CEO Avishai Abrahami confirmed this decision. He cited the rapid evolution of artificial intelligence. Fluctuating international currency values also added pressure. The company aims for faster decisions with fewer leadership layers.

https://www.cnbc.com/2026/05/28/wix-layoffs-ai-exchange-rates.html

Hard to keep calliing yourself a “leading company” when the customers are disappearing...

Maybe the next growth market is selling health insurance in all the countries they offshored all this work to. Oh wait now AI is coming for those jobs too? My bad. Maybe Im just not seeing the grand strategy here...

So who exactly buys the AI-generated products and services when the workers who used to have paychecks are gone? Other AI or soemthing else... a closed little circle of bots healing and billing other bots?

Brilliant stuff for real... The rocket scientists may have missed one tiny detail and that is that customers need income before they can become customers.

That is awful news for Nike because after collapse of DTC, Nike needs more doors than ever before!!! There are no new stores coming down the pipeline and existing ones are going down the pipe.
I guess that is when you say Nike is stuck in a rock and a harp place!!

Brick and mortar shoe stores are done!!! So it is up to Nike to create new source of doors to move their product.
Brick and mortar is done!! So what Nike should do is open third party sellers in amazon, walmart and ebay to sell in that platform who are there with proven good standing status.
Nike cannot open more independent brick and mortar stores since nobody in right mind will open stores.
So Nike needs to go outside of box and open independent third party sellers in internet!!!

Hearing from a few people that another round may hit by EOM ( May) or sometime in June... word going arund is bottom 10% and retirements could be part of it. Sounds like calibration season all over again.

Business transformation was supposedly the big reset, but now people are saying more org changes and headcount reductions are still coming.

Anyone else hearing this in IT, Finance, Commercial, HR, or the plants?

Feels like management already knows more than they are saying. Same pattern as last time. Silence for months, then sudden announcements.

This is turning into a zero sum game of attrition. One leaves, one inherits, until they leave, and then the next inherits (meaning, they’ve inherited two in addition to their own). And then they leave…. Eventually the ones who will be leaving, are the very thing they inherited….the client. What a STUPID and expensive game, because eventually they’ll need to rehire, at elevated market pay rates in hopes they can get the clients back. It’s only a matter of time now before that next phase of client migration to other financial services firms accelerates.

They’ve cut ~20% of the workforce today as, “ the business reorganization we announced today, which will impact approximately 20% of our global workforce. The intent of the reorganization is to simplify our global engineering operations, reduce our fixed costs, lower general and administrative expenses, and accelerate our move up-market and away from down-market SMB.”

Open forum. What functions do you find relevant for moving to shared services?

Which functions and teams coild be ki-led around the world and why?

So it starts, now well publicized on the news Sycamore is closing stores under the guise of security or safety, and while that's a concern, their goals are to get out of leases to reduce their debt obligations (somewhat good), and pad their pockets by selling off any real estate that is owned. However, it is NOT with improving the business in mind. It is purely a way to pay themselves. Look at their history on their other large holdings, Staples they are continuing to reduce stores under the premise they are low performing stores, but in many cases it's just to cook the books. Essendant, they sold off the majority of their real estate for millions as a cost reduction for low performing, closed the majority of their business, but never invested back into the company. Talbots, Hot Topic, Belk, Pure Fishing they are closing stores/warehouses/offices and leaving just a shell of businesses they will never invest back into to improve. Sycamore is evil, and just plays with people's lives to line their own pockets over and over again.

JOMO - The Joy of Missing Out —is the ultimate leadership flex. * It’s the joy of trusting your team to take "Total Ownership" of the talent lifecycle without you in the room.

Let’s stop rewarding "presence" and start rewarding "impact."
Who’s brave enough to decline that 4:00 PM "update" meeting and trust the team to handle it? That’s the BOLD standard.

#Leadership #JOMO

Wise words from our world class chro!!!

Agropur announced the closure of its Sussex-area plant. The facility is scheduled to cease operations in 2028. This decision came months after the company received a significant provincial loan. The $2.4-million non-repayable loan was intended for modernizing Agropur's Miramichi facility. Critics suggest the province should have been informed about the impending layoffs before the loan agreement.

New Brunswick

https://www.msn.com/en-ca/news/canada/holt-says-agropur-should-have-told-nb-about-layoffs-before-loan-deal/vi-AA21Rfo3?cvid=69f04d0d8d46447bb9248ddd9c6063b4&ocid=hpmsn

TL;DR : Nike needs to make more desirable products again and get them in front of more people by focusing on a few big hits and not over-relying on its own stores.

Nike should prioritize restoring brand heat and product distinctiveness while rebalancing its channel mix. The shift toward direct to consumer has supported margins but reduced marketplace visibility. I would recommend sharper segmentation of distribution, reinvesting in key wholesale partners for reach, while elevating owned channels for premium storytelling and data. In parallel, focus the innovation pipeline on fewer, bigger product bets across core categories, reducing complexity and improving speed to market. Growth will come from concentrating demand around iconic, high velocity products rather than expanding assortment.

This likely requires a simpler operating model with clearer priorities and faster decision making. That includes reducing organizational complexity, aligning incentives around end to end category performance, and empowering teams closer to the consumer to act with speed. There is also an opportunity to improve demand forecasting, merchandising discipline, and supply chain responsiveness to increase precision without adding overhead. Cost discipline matters, but primarily as an enabler of speed, creativity, and execution rather than the goal itself.

Thoughts?

The Associated Press plans staff cuts and a business restructuring. This move shifts focus from local print to video and national topics. Revenue from tech companies has significantly grown for the AP. A voluntary separation plan will first be offered to U.S. news staff. Layoffs will follow if insufficient voluntary interest is received.

https://www.axios.com/2026/04/06/ap-staff-cuts-restructuring

Just saw this on Wells Fargo's board, it's coming our way too:

• Thread regarding Wells Fargo & Co. layoffs
  Agentic engineering as a standard
  Link: @OP+1kmzq8d4n

  We all knew that something like this will surface sooner or later. Now all engineers are expected to go full agentic starting right this second ( according to the communication). They even drafted a roadmap of how they envision this would take place. What are your thoughts about this move? I guess, this is mainly will affect technology but looks like some businesses will be included in this madness as well.

#BusinessTransformation #Change #Communication #Culture #Technology

4 days ago by Anonymous | 1029 views | 12 reactions (+8/-4) | 11 replies (last 3 days ago) | Reply
Post ID: @OP+1kmzq8d4n

We all knew that something like this will surface sooner or later. Now all engineers are expected to go full agentic starting right this second ( according to the communication). They even drafted a roadmap of how they envision this would take place. What are your thoughts about this move? I guess, this is mainly will affect technology but looks like some businesses will be included in this madness as well.

Delaware North is cutting an undisclosed number of jobs. This action stems from a strategic shift in its business model. The company is moving away from contract-based operations. It now prioritizes owned and managed assets globally.

https://buffalonews.com/news/local/business/article_0f3b8aa1-8200-4061-ba0c-f9aad86d4bc9.html

If you want to trim away the useless, then start with HR. Just keep the bare bones skeleton crew, let the HR chatbot and AI do the rest of that work. If Citi AI can’t handle the mundane low hanging fruit HR work, then it has no place trying to be wedged into anything more complex or technical.

If it can’t be developed enough, tested enough and rock solid enough to handle the HR work load, then you have business trying to make it do anything more complex. It’s like trying to use a calculator that can’t add or subtract to perform advanced algebra. Use the HR role as your live test bed. Once you get that part down, you can then showcase what a success it is in all you little ppt slides and THEN move on to something more complex.

Paramount is acquiring Warner Bros. Discovery in a major deal. The acquisition is valued at $111 billion. This merger is expected to result in thousands of layoffs. Paramount identified $6 billion in cost synergies. The deal is projected to close in fall 2026.

https://www.avclub.com/warner-bros-paramount-deal-layoffs-110-billion

Catalent is cutting 96 more jobs in Maryland. This round affects 93 employees in Harmans and three in Baltimore. The layoffs will become effective on March 19. This follows previous reductions of over 400 jobs last year. The company cited a shift in demand from a large customer.

https://www.fiercepharma.com/manufacturing/catalent-cuts-staff-96-another-round-layoffs-maryland

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