FSN: Interview with Steve Semenzato

Interview with Steve Semenzato - CEO ClusterSeven

5th June 2006
Spreadsheet management is still a relatively new science. Almost everyone in business, especially financial services companies, is aware of the risks to their pockets and reputations of errors and misstatement in spreadsheets but few, it seems, are prepared to do anything about it. Up until quite recently, there was very little that an organisation could do to manage the risks except set standards of documentation and quality control. But in 2003 a visionary new company, set out its stall with brand new technology aimed at spreadsheet compliance. Three years on, FSN Managing Editor, Gary Simon, interviews Steve Semenzato, CEO ClusterSeven to learn about the company's progress.

When the ClusterSeven was formed in 2003, it was faced not only with the unenviable task of launching itself as a start-up company but also making a market with a completely new product and concept. A variety of spreadsheet auditing tools existed at the time but nobody seemed to provide a system that could detect every aspect of spreadsheet usage across a network. As the company is fond of saying, the system is like a CCTV camera that constantly surveys spreadsheet usage, and can alert management to critical events such as a formula being overwritten with data, or cells being deleted. In a banking or trading setting, where spreadsheets hold positions and valuations, spreadsheet blunders can translate almost instantly into financial loss.

“We are definitely much better known now,” says Steve Semenzato. “People are saying they need to know more about this, or we have heard about ClusterSeven, let's try to understand better what they are offering. But it is still a brand new space and we are still making a market. Companies do not have a budget for ‘spreadsheet management', so we have to tuck in under some form of general compliance project or agenda in order to get funded. Furthermore we have to counter a certain level of denial. People imagine that the problems can be sorted out by the application of manual controls. But manual controls have to work every time and inevitably they fail. The future is the automation of the process of spreadsheet compliance.”

Although the company has had to overcome massive obstacles it has been rewarded with some successes. Its client base, though small, includes prestigious banking and energy trading businesses, it has attracted a new multi-million pound round of venture capital and it has expanded into new offices both in the City of London (where it is headquartered) and in New York .

Technology has advanced since the company started trading and Semenzato concedes that its products are not as unique as they were at the start. The boundaries are blurring between content management systems, process automation systems, Microsoft Office and ClusterSeven's spreadsheet management applications. Semenzato is ‘sticking to the knitting' but looking for affiliations with related software vendors where there is constructive overlap. “We are staying pure to our vision” says Semenzato underscoring that the company is resisting the distractions of the broader market. “ClusterSeven's technology has application in very many different areas but we are concentrating on the largest enterprises in the financial services sector in London and New York .” So the software, which is already functionally rich, is evolving slowly and developments in hand are concentrating on ease of installation, reporting and monitoring.

The impending launch of Microsoft Office 12 , with promised server based spreadsheets could have represented a competitive threat to ClusterSeven. “The reality is that Office 12 will provide lots of assurance and auditability around spreadsheet metadata, such as, who authorised the spreadsheet, who changed it and when. It's not going to do anything for monitoring content or spreadsheet compliance,” says Semenzato.

The omens are looking good and ClusterSeven seems poised for greater success. One particularly encouraging development is that early adopters of the technology are expanding their implementations. One financial institution had 120 critical spreadsheets ‘under management' and this has expanded to 1700. “The system was initially implemented in the middle office, which used to have to check spreadsheets manually. But both the front and back office functions were able to see the benefits and so the application is extending to other areas.” Semenzato is especially pleased that customers are apparently saying “we had better Clusterseven that spreadsheet,” suggesting that brand awareness is in the ascendancy.

Compliance is still a big driver for ClusterSeven. Sarbanes Oxley in particular is generating interest in ClusterSeven's product offerings although US Banks are already compliant. On the other hand, Canadian and European banks now have to fall into line and UK banks are already studying the revised processes that they will need. Semenzato considers that many processes have been rendered extremely inefficient in the drive to demonstrate compliance, with workarounds and lots of manual intervention. “They are not automated and are ideal candidates to be ClusterSevened!” he says. In another positive sign, Semenzato is seeing a number of RFPs (requests for proposals) and tendering opportunities coming out of the United States on the back of these developments.

So three years after launch, ClusterSeven is finding its feet. It has not been smooth sailing and Semenzato is conscious of the enormous amount of education and persuasion that remains to be done. Nevertheless, ClusterSeven has established itself. “People know a lot more about spreadsheet compliance than they did a year ago,” concludes Semenzato.

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