All posts by Dave Scharf

CloudBC seeks to save province millions in IT costs

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Documents obtained with an access to information request indicate that the Government of British Columbia intends to potentially save hundreds of millions of dollars by moving public sector computer services into the cloud.

CloudBC is a new organization, administered by the B.C. Ministry of Technology, Innovation, and Citizens’ Services. It has been established to encourage and support the successful adoption of modern, cloud-based business and technology services across the broad public service. Although the specific strategy is still under development, CloudBC’s focus will be to support public sector organizations’ efforts to adopt services supplied by qualified third party vendors.

CloudBC is in the process of identifying very specific technology requirements. At GTEC 2015, a large annual conference that addresses technology specific to Canada’s public sector, Mike Larson, CloudBC chief operating officer said, “In BC, we’ve come up with some definitive language to tell companies how they’re going to deliver the service for us.”

The documents suggest that at least two data centres will be built and maintained by private vendors like Microsoft or Hewlett Packard. These are to be in strict compliance with CloudBC’s list of requirements. To ensure sovereign security of private information, these data centres must be located in Canada.

Contracts were to be in place by the end of March, 2016 but as of now, no contracts are signed between government and industry. Once the data centres are ready and vendors contracted, the successful third-party suppliers will provide “pay-as-you-go” cloud IT services to government agencies. Participating crowns, ministries, and departments will be encouraged to begin adoption of cloud computing services.

Government documents reveal that security and privacy are prime concerns. Legislation requires several of the B.C. agencies and crowns involved in the CloudBC initiative to maintain privacy of personal information like health records. The technology to be adopted must be capable of keeping private information secure while making public information widely available.

Huda Qasim, IT researcher at Yarmouk University notes that, “Cloud computing is said to be the way forward, offering… cost reduction and flexible and handy scalability. But along with these many advantages, the cloud computing environment suffers from many risks like security and privacy.”

CloudBC management intends to work with early adopters to “demonstrate quick wins” to the remainder of the pubic service and, thus, encourage conversion to cloud service in agencies that are initially reluctant. It is anticipated that efficiency, ease-of-use, and savings are to the be obvious incentives to change to cloud computing services.

In briefing notes from August 14, 2015 obtained with an access to information request, Larson notes several key observations from the business case. Cloud computing services are now mature; they are no longer unreliable. And, cloud computing is much more affordable than the traditional model of installing dedicated hardware in every participating organization.

The Cloud BC business case was creating in consultation with chief information officers from the B.C. government, six regional health authorities, and six major crown corporations – BC Hydro, Insurance Corporation of BC, WorkSafeBC, BC Lottery Corp, BC Ferries, and BC Pension Corp. These participating agencies combine to account for $3 billion in annual IT costs.

Elsewhere in the documents a 15 to 20 percent cost saving in estimated. If realized, this will save the Government of BC from $450 to $600 million dollars per year.

These savings are not certain. Again from his address at GTEC Larson notes, “There’s many reasons why we think we’re going to have problems.”

Moving to cloud computing, though, seems inevitable and it has either been adopted or is process in Singapore, Australia, New Zealand, the UK, and the US. Not to mention the Government of Canada.

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FOIPPA request excerpts

Explanation of FOIPPA request excerpts

Saskatoon’s inner-city among the most homicidal places on earth

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Among Canadian cities, Saskatoon, Saskatchewan has the fourth highest homicide rate. Still, on a global scale, it is a comparatively safe place. Contrast this with Saskatoon’s inner-city. Five core neighbourhoods in Saskatoon have a homicide rate that is 35 percent higher than Democratic Republic of Congo, one of the most murderous countries on earth. How bad is it there? The Government of Canada presently recommends avoiding non-essential travel to the Congo.

After eight homicides in 2014, Statistics Canada reported Saskatoon’s homicide rate to be 2.61 per 100,000. Seven of these deaths were in the neighbourhoods of Caswell Hill, King George, Meadowgreen, Mount Royal, and Pleasant Hill. Using only the population of these inner-city neighbourhoods, the homicide rate is 38.46 per 100,000. If inner-city Saskatoon were a country, it would be the seventh most homicidal nation on earth, just ahead of Jamaica and just behind El Salvador.

[This map shows the location of all eight homicides in Saskatoon in 2014. It also highlights the five inner city neighbourhoods being examined.]

“For years and years my neighbourhood was a sheltered little area,” says Owen Woytowich who lives in Saskatoon’s Mount Royal. “Now I see it everywhere. You can actually feel it at night. They can put a man safely on the moon. I don’t feel safe walking in my neighbourhood at night.”

Woytowich, 32, grew up in Mount Royal just down the street from where he now lives with his pregnant wife and two-year-old son. The baby is expected any day. “The neighbourhood has changed a lot in the last ten years,” he says. “The inner-city is getting bigger. It’s crazy.”

Tammy Morrison now lives near Woytowich in Mount Royal, she used to live in Pleasant Hill. “That was intimidating,” she says. “I think living in a city one has to be aware of their surroundings. No matter the size.”

Woytowich and Morrison’s neighbourhood is among the oldest and poorest parts of the city. The average household income in Mount Royal is $53,554 per year. The other four inner-city neighbourhoods are similar. Morrison’s old neighbourhood, Pleasant Hill, occupies the lowest spot at just over $36,000 per year. It is no surprise that locals often refer to it as, “Not so Pleasant Hill.” All five inner-city neighbourhoods are well below the city’s average household income of $82,543 per year.




“Poverty is the biggest predictor of violence,” says Dr. Maria Tcherni-Buzzeo. “The higher the poverty rate, the higher the homicide rate. Homicides tend to be highly clustered in the inner cities.”

Tcherni-Buzzeo is an assistant professor in the Henry C. Lee College of Criminal Justice and Forensic Sciences, University of New Haven. She studies the causes of violence. “There are many correlations to poverty, violence is just one. Divorce rate is another.” Tcherni-Buzzeo’s research has found that addressing the mental health of youth reduces delinquency.

“One of the high correlations to poverty is the mental health of children,” she says. “Prescribing psychotropic medication to children with psychiatric conditions clearly decreases delinquency.” She does not advocate overmedicating. Rather, she simply notes that a whole host of problems come with poverty and some of them, possibly including the mental health of young people, create circumstances which increase homicide rates in the long term.

“You see kids wandering around at all hours with no supervision,” Woytowich says. “If they had something to do maybe they wouldn’t get into trouble.”

Pengrowth Energy Corporation: A toxic sea of losses

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Pengrowth Energy Corporation, a mid-sized Canadian oil and gas producing company, is swimming in a toxic sea of losses. The only thing remedy, a return to higher world oil prices.

Oil is a non-renewable resource. When it is used up, it’s gone. Consumption of fossil fuels is at the heart of climate change. If we do not curtail our use of fossil fuels, we risk permanently damaging the world’s climate.

Despite dire warnings like these and despite constant examination by the financial industry, an apparently unforeseen global glut of oil supply arrived about eighteen months ago. And, oil prices dropped. Precipitously. Not surprisingly, the profitability of Canadian oil production companies dropped too.


In September 2014 Pengrowth was getting almost $105 per barrel of oil. At that price, in three month from July to September, 2014 the company made a profit of just over $133 million. Life was grand. But, those halcyon days are gone. At least for now.

By September 2015 Pengrowth was getting just $61 per barrel of oil. At this new price – 42 percent lower than the previous year – July to September, 2015 the company lost almost $340 million. Gulp. This is the number that pops off the page of the 2015 third quarter financial report. That is a profit/loss swing of almost half a billion dollars.


If this loss rate of $340 million per quarter were to continue, Pengrowth would lose over $1 billion per year – the total amount of credit they have available.


Pengrowth’s results for the last three months of 2015 have not been released but things may get even worse. The price of oil has declined to $47 per barrel as of January 29, 2016. Now 59 percent lower than the glory that was September 2014. Uh oh.

Success in business is pretty simple. If revenue exceeds costs you are a success. If costs exceed revenue, losses pile up and you eventually go bankrupt. Pengrowth urgently needs to increase revenues and decrease costs.

CIBC business analyst Jeremy Kaliel notes that Pengrowth has increased short term revenue by selling assets. The company sold assets in 2015 that brought in $263 million. Further deals already made will see another $37 million by March, 2016.

In a news release on January 21, 2016 Pengrowth President and Chief Executive Officer, Derek Evans, notes that the company intends to sell more assets worth another $300 million sometime in 2016. There is nothing in the news release to indicate if this plan will be brought to fruition. There are, apparently, no deals currently signed, just good intentions.

Costs are being reduced, too. Pengrowth reduced its quarterly dividend to $0.01 per share for the last quarter of 2015 and then eliminated the dividend altogether to start 2016. There is no money allocated towards new drilling in 2016. Production at existing wells is reduced. Head office staff has shrunk by 26 percent. Pengrowth is bailing water. Fast.

“For an investor with a five-year horizon, oil may be a good play,” says Fraser Sutherland, Vice-President, CIBC Wood Gundy. In other words, if you can wait five years, oil price should rebound and oil production company share prices will roar back earning investors a tidy profit. Or so the theory goes.

“Based on a consensus of oil research firms, it is expected that West Texas Intermediate Crude will sell for approximately $70 a barrel in 2018,” says Sutherland. This falls between the very profitable price of $105 seen in 2014 and the devastating price of $61 seen in September 2015. It is also the number which most pundits pick as the price needed to see an efficient Canadian oil industry return to profitability.

We are left with two questions: (1) Will the $70 per barrel prediction for 2018 come true? (2) Can Pengrowth stay afloat until then?

As is often the case with global business, unforeseen circumstances – war, terrorism, revolution – can have a remarkable effect on things like the price of oil, both good and bad. Jobs, savings, and, indeed, whole provincial economies may turn on this question.



Pengrowth Energy Corporation Stock Price by DaveScharf on TradingView.com