What is IoT & Why IoT is Important

August 7, 2023

The concept of the Internet of Things revolves around a networked system comprising various interconnected devices, both digital and mechanical, as well as individuals, animals, or objects. 

These entities are equipped with unique identifiers (UIDs) and possess the capability to exchange data without necessitating direct human-to-human or human-to-computer interaction.

Within the IoT framework, a “thing” can encompass a diverse range of entities.

For instance, it could refer to a person fitted with a health monitoring implant, a farm animal implanted with a biochip transponder, or a vehicle equipped with sensors that notify the driver about low tyre pressures.

Essentially, any object, whether naturally occurring or human-made, can be assigned an Internet Protocol (IP) address and communicate data across a network.

The adoption of IoT is gaining momentum across various industries.

Organisations are beginning to recognise its potential to enhance operational efficiency, gain deeper insights into customer behaviour for improved service delivery, facilitate informed decision-making, and improve overall business value.

As a result, more and more businesses are integrating IoT technologies into their operations to streamline processes, boost productivity, and achieve competitive advantage.

In this article we will cover what IoT is and how it works, why IoT is important, which industries can benefit from it, and the pros and cons of IoT. 

What is Industrial IoT?

IoT Smart City Surveillance
Surveillance & security relies heavily on IoT technology. Image credit: Shutterstock

IIoT, or Industrial IoT, applies IoT technology to industrial settings, enhancing control and instrumentation using cloud-based systems.

It’s often referred to as the fourth wave of the industrial revolution, Industry 4.0.

With machine-to-machine communication and advancements in cloud technologies, such as analytics and machine learning, IIoT enables a new automation layer, leading to innovative revenue and business models.

Common IIoT applications include:

Smart Manufacturing

Optimising productivity, quality control, and operational efficiency through real-time monitoring, predictive maintenance, and agile production systems.

Connected Assets & Preventive/Predictive Maintenance

Seamless connection of assets for real-time monitoring, data analysis, and proactive maintenance to reduce downtime and optimise asset utilisation.

Smart Power Grids

Transforming traditional power grids into smart grids by integrating IoT devices, sensors, and analytics for efficient energy distribution, load balancing, and grid stability.

Smart Cities

Improving urban infrastructure management with IoT connectivity, enabling efficient transportation, energy management, waste management, and public safety.

Connected Logistics

Revolutionising logistics and supply chain operations through real-time tracking, monitoring, and optimisation of shipments, inventory, and vehicles.

Smart Digital Supply Chains

Digitally transforming supply chains by connecting stakeholders, enabling end-to-end visibility, demand forecasting, inventory optimisation, and streamlined logistics.

IIoT empowers industries to achieve automation, efficiency, and innovation, revolutionising their operations and business models in the digital era.

What are IoT Apps?

IoT Intelligent Applications are prebuilt software-as-a-service (SaaS) applications designed to analyse and present IoT sensor data to business users through intuitive dashboards.

These applications leverage machine learning algorithms to process large volumes of connected sensor data in the cloud.

By utilising real-time dashboards and alerts, businesses gain valuable insights into key performance indicators, statistics like the mean time between failures, and other relevant information.

Machine learning algorithms play a crucial role in identifying anomalies in equipment performance, allowing for prompt alerts to be sent to users.

These alerts can trigger automated fixes or proactive measures to address potential issues. 

By leveraging cloud-based IoT applications, businesses can enhance existing processes in various areas such as supply chains, customer service, human resources, and financial services.

The advantage lies in the ability to integrate IoT capabilities seamlessly into existing workflows without the need for extensive process redesign.

This facilitates quick adoption and implementation of IoT technologies to drive efficiency and improvements across multiple business functions.

How Does IoT work?

Human Machine Augmentation
Artificial intelligence is becoming commonplace in modern society. Image credit: Pexels

In an IoT ecosystem, the key components are web-enabled smart devices that are equipped with embedded systems.

These systems encompass processors, sensors, and communication hardware, enabling the devices to gather, transmit, and respond to the data they acquire from their surroundings.

The collected sensor data from IoT devices is shared by connecting to an IoT gateway or another edge device.

From there, the data can either be sent to the cloud for analysis or analysed locally.

Furthermore, IoT devices have the capability to communicate with other interconnected devices, exchanging information and taking actions based on the received data.

Human intervention is not always necessary, as these devices primarily operate autonomously.

However, individuals can interact with the devices to perform tasks such as setup, provide instructions, or access the collected data.

The choice of connectivity, networking, and communication protocols utilised in IoT ecosystems largely depends on the specific applications being deployed.

Different IoT applications may require different protocols to ensure efficient and secure data transfer and communication between devices.

Moreover, IoT can leverage artificial intelligence (AI) and machine learning techniques to enhance and streamline the data collection process.

These technologies enable IoT systems to analyse and interpret data more effectively, leading to improved decision-making, predictive capabilities, and adaptability in various scenarios.

By incorporating AI and machine learning, IoT devices can gather data in a more dynamic and intelligent manner, unlocking additional insights and opportunities for innovation.

Why IoT is Important

The Internet of Things (IoT) has become instrumental in enhancing both personal and professional aspects of people’s lives, offering increased convenience and control.

Beyond its impact on home automation, IoT plays a critical role in transforming businesses. 

By providing real-time insights into system operations, IoT empowers companies to gain a comprehensive understanding of their processes, spanning from machine performance to supply chain and logistics operations.

With IoT, businesses can automate various processes, leading to reduced labour costs and increased operational efficiency.

It minimises waste and enhances service delivery, resulting in cost savings in manufacturing and logistics while providing transparency in customer transactions.

As a result, IoT has become one of the most crucial technologies in our daily lives.

Its importance will only continue to grow as more businesses recognise the potential of connected devices in maintaining their competitive edge.

The adoption of IoT offers businesses the opportunity to optimise their operations, improve decision-making, and deliver enhanced products and services to meet evolving customer demands.

How IoT is Important in Daily Life

Better Life Quality

IoT devices, like smartphones, improve our daily lives by enabling communication and convenient access to information.

This saves time and boosts productivity, allowing us to focus on more important tasks.

IoT devices also promote wellness through dedicated applications.

Process Automation

IoT enables the automation of tasks such as controlling lights, opening garage doors, and monitoring fitness.

By using sensors and IoT technology, these activities can be easily managed and scheduled, making life more efficient and convenient.

Data-Driven Decision Making

IoT collects vast amounts of data that can be used to make informed decisions.

For example, monitoring soil conditions in agriculture or analysing customer behaviour in retail.

By leveraging data insights, we can identify issues and make better choices.

Real-Time Monitoring

IoT enables real-time monitoring of various factors, such as home goods’ quality or asset performance in businesses.

This ensures timely action and helps in maintaining optimal conditions.

Industries are adopting IoT-based monitoring solutions to improve efficiency and safety.

Overall, IoT simplifies life, automates tasks, enables data-driven decisions, and provides real-time monitoring capabilities.

Which Industries Can Benefit from IoT?

Millions of people use IoT devices in their daily lives. Image credit: Unsplash

Organisations that can derive significant benefits from IoT are those that can leverage sensor devices in their business processes.

Here are several industries where IoT applications are well-suited:


By implementing IoT-enabled production line monitoring, manufacturers can proactively maintain equipment by detecting potential failures through sensors.

Real-time alerts allow for prompt equipment inspections or removal from production, reducing operating costs, improving uptime, and enhancing asset performance management.


The automotive industry can capitalise on IoT applications not only in production lines but also in vehicles already on the road.

Sensors can detect equipment failures and provide alerts to drivers with details and recommendations.

Aggregated IoT data assists manufacturers and suppliers in understanding how to optimise vehicle performance and keep owners informed.

Transportation & Logistics

IoT applications benefit transportation and logistics systems by providing valuable sensor data.

Fleets can be rerouted based on factors like weather conditions, vehicle availability, or driver availability.

IoT sensors can also track inventory, enabling track-and-trace functionality and temperature control monitoring.

This is particularly valuable in temperature-sensitive industries like food, beverages, flowers, and pharmaceuticals.


IoT enables retailers to manage inventory, enhance customer experiences, optimise supply chains, and reduce operational costs.

Smart shelves equipped with sensors can automatically monitor inventory levels and trigger alerts when items are running low.

Beacons can deliver targeted offers and promotions to customers, creating engaging experiences.

Public Sector

IoT applications offer numerous benefits to the public sector, including utilities. 

Government-owned utilities can use IoT to notify users of outages and gather data on the scope of the disruption to deploy resources efficiently.

This expedites the recovery process and minimises service interruptions in water, power, or sewer utilities.


IoT asset monitoring in healthcare provides several advantages.

Assets like wheelchairs can be equipped with IoT sensors, enabling precise tracking and easy access.

This improves asset usage, simplifies inventory management, and enhances patient care.

IoT applications can be leveraged in various healthcare settings to track assets and ensure safety and efficient resource allocation.

Improved Safety Across All Industries

IoT can significantly improve worker safety, particularly in hazardous environments. 

Employees in industries such as mining, oil and gas, and chemical and power plants can be connected to IoT sensor-based applications to receive prompt notifications and rescue assistance during hazardous events.

Wearables with IoT capabilities enable health monitoring and allow remote patient monitoring, benefiting both individuals and healthcare providers.

Benefits of IoT

Access Information Anytime, Anywhere

IoT allows for convenient access to information from various devices regardless of location. 

This enables users to stay connected and retrieve data on the go, enhancing efficiency and productivity.

Improved Communication

IoT fosters seamless communication between connected electronic devices.

This enables efficient data sharing and collaboration, leading to enhanced decision-making and streamlined processes.

Time & Cost Savings

The transfer of data packets over connected networks saves time and money by eliminating the need for manual data entry and reducing communication costs.

This promotes efficiency and accelerates operations.


IoT facilitates task automation, reducing the need for human intervention.

Automated processes enhance the quality of services, minimise errors, and free up human resources to focus on more strategic and complex tasks.

Disadvantages of IoT

Security Risks

As the number of connected devices increases and data is shared between them, the risk of potential cyber threats and the theft of confidential information also rises.

Robust security measures are crucial to mitigate these risks.

Data Management Challenges

Dealing with a massive number of IoT devices and managing the data they generate can be complex.

Collecting, analysing, and interpreting data from diverse sources pose challenges in terms of storage, processing, and extracting actionable insights.

System Vulnerabilities

If a bug or vulnerability exists in an IoT system, it has the potential to impact every connected device, leading to widespread disruptions or compromises.

Maintaining robust security protocols and regular updates is crucial to minimise such risks.

Lack of Standardisation

The absence of a universal compatibility standard for IoT devices makes it challenging for devices from different manufacturers to communicate effectively.

This limits interoperability and hinders the seamless integration and coordination of diverse IoT systems.

It’s important for individuals and organisations to be aware of these advantages and disadvantages while considering the adoption and implementation of IoT technologies. 

Mitigating security risks, ensuring efficient data management, addressing system vulnerabilities, and promoting standardisation efforts are key considerations in maximising the benefits of IoT while minimising potential drawbacks.

IoT Standards

There are several emerging IoT standards and frameworks that facilitate the interoperability and development of IoT solutions.

Some notable examples include:

IPv6 over 6LoWPAN)

An open standard that enables low-power radios, such as 802.15.4, Bluetooth Low Energy (BLE), and Z-Wave, to communicate with the internet.


A low-power, low-data rate wireless network standard primarily used in industrial settings, based on the IEEE 802.15.4 standard.

ZigBee Alliance created Dotdot, a universal language for IoT, enabling secure communication between smart objects across different networks.


A Unix-like operating system (OS) for wireless sensor networks, supporting various IoT applications such as smartphones, wearables, smart homes, and the internet of vehicles (IoV).


A machine-to-machine service layer embedded in software and hardware, aiming to establish reusable standards for IoT communication across different verticals.

Data Distribution Service (DDS)

An IoT standard developed by the Object Management Group (OMG) for real-time, scalable, and high-performance M2M communication.

Advanced Message Queuing Protocol (AMQP)

An open-source standard for asynchronous messaging that enables secure and interoperable communication between organisations and applications, commonly used for IoT device management.

Constrained Application Protocol (CoAP)

An IETF protocol that defines how low-power, compute-constrained devices can operate within the IoT.

IoT Frameworks

Amazon Web Services (AWS) IoT

A cloud computing platform that enables secure connectivity and interaction between smart devices and the AWS cloud.

Arm Mbed IoT

A platform for developing IoT applications based on Arm microcontrollers, providing a scalable and secure environment for IoT devices.

Microsoft Azure IoT Suite

A set of services allowing users to interact with and process data from IoT devices, perform data analysis, transformation, and visualisation in a business-friendly manner.

Google Brillo/Weave

A platform consisting of Brillo, an Android-based OS for embedded devices, and Weave, an IoT communication protocol facilitating device-to-cloud communication.


An open-source IoT platform released by Ericsson, offering a development framework for building distributed applications that enable device-to-device communication.

These standards and frameworks play a crucial role in enabling interoperability, security, and efficient development of IoT solutions across various industries.


The Internet of Things (IoT) is revolutionising the way we live and work, offering numerous advantages and opportunities across various sectors.

When we understand the true extent of how much it impacts and influences our lives, it’s clear to see why IoT is important.

IoT allows for improved communication, access to information from anywhere and at any time, automation of tasks, data-driven decision-making, and real-time monitoring.

It enhances our daily lives, boosts productivity, and drives efficiency in businesses.

However, there are also challenges associated with IoT, including security risks, data management complexities, system vulnerabilities, and the lack of standardisation. 

Overcoming these challenges requires robust security measures, efficient data handling, regular updates, and collaborative efforts to establish universal compatibility standards.

To support the development and implementation of IoT solutions, there are emerging standards and frameworks available that provide platforms for building and managing IoT applications.

As IoT continues to evolve, it will play an increasingly significant role in our lives, transforming industries, enabling innovation, and driving progress.

It’s essential for individuals, businesses, and organisations to embrace the potential of IoT while addressing its challenges, ensuring security, interoperability, and effective utilisation of IoT technologies to unlock the full benefits it offers.

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