Auction house Bonhams Bids on Open Source
Added 1st Jun 2007Article Highlights
- Why Bonhams opted for an in-house system, instead of licensing enterprise software
- How IT gives enterprise new leverage in the marketplace
- How agility translates to customer satisfaction
Shortly after 10am on an April Sunday, eager auction-goers began bidding on more than 1,100 items - paintings, furniture, decorative pieces and vintage couture - that London-based auction house Bonhams had put up for sale in its Los Angeles showroom. An image of a Jules Lefranc oil painting depicting Parisian rooftops with the dome of Sacre Coeur cathedral in the background was projected on two ony flat-screen TVs at the front of the room.
“Bonhams' IT director Roland Whitehead says his Linux servers are so reliable that he needs only two systems analysts to support them.”
"Let's open the bidding for this item at $350," announced the auctioneer, a rosy-cheeked woman with frosted blond hair. Immediately, a prospective buyer discreetly raised her paddle to bid on the painting, valued between $800 and $1,200 (all dollars are US). "Three-fifty in the back," the auctioneer called. "Let's go to four." Another bidder raised his paddle. "Four hundred in the centre of the room. Go $450," the auctioneer called.
The bidding continued fast and furiously in $50 increments until the auctioneer hit $1,000, whereupon she began increasing the bids by $100. "Do I have $1,200?" the auctioneer asked. A man seated toward the back of the room waved his paddle. "Twelve hundred in the back of the room. Go to 13." An art collector representing a buyer on the phone raised his paddle on behalf of his bidder. "Thirteen on the phone. Go 14," said the auctioneer. The buyer who bid $1,200 raised his paddle to bid $1,400. "Fourteen hundred is bid in the room. Go 15," the auctioneer announced. A hush came over the gallery. Was that it? Was the bidding out at $1400? The auctioneer asked: "Any advance on $1,400?" The auction representative on the phone with the remote buyer (a Paris-based fine art dealer) whispered to his bidder that someone in the room bid $1,400. Did the dealer want to bid $1,500? Yes, and the rep raised his paddle. But the buyer in the room still wanted the painting too, and bid $1,600. The buyer on the phone bid $1,700. "I have 17 on the phone. Any advance on $1700?" the auctioneer asked, her eyes scanning the room for last-minute bids. No movement. With a rap of her gavel on the podium, the auctioneer announced: "Sold for $1,700 to bidder number 2812", and then she quickly moved on to the next painting.
And just like that, in two days, Bonhams showcased 1138 and sold 930 lots of merchandise, which is nearly 80 percent more than the average number of items Sotheby's puts on the block during one of its two-day sales.
I.T. Fuelling Growth
Selling more items at a lower cost is Bonhams' strategy for competing with Christie's and Sotheby's - the number-one and number-two powerhouses respectively in the $6-billion art and antiques auction industry. The privately held Bonhams, which conducted over $400 million in auction sales in 2005, hopes to increase its small fraction of the market (currently 6 percent) by establishing itself as a mid-tier player and broadening its audience beyond the blue bloods who patronize auctions. Although Bonhams has a long way to go before it poses a serious threat to Christie's and Sotheby's, it has made progress toward increasing its business. And IT - specifically a strategy of building an open source infrastructure - has helped support and fuel that growth. Bonhams' sales have grown from a reported $64 million in 2000 to more than $400 million. Its customer base has tripled to 1.3 million. With the art auction industry on fire again after a three-year downturn, industry watchers say Bonhams stands to gain market share as collectors who wish to capitalize on the surge put their pieces up for sale. The secret sauce behind Bonhams' bid to grow and flourish is a home-grown auction management system, which runs on Linux and powers almost every aspect of the auction house's business, including functions as wide-ranging as property management and CRM.
