IoT Technology – How it Works

The Internet of Things (IoT) technology rises, how it works, why it is important, benefits and challenges associated with it.

The Internet of Things (IoT) has risen from the evolution of wireless technologies, microelectromechanical systems, and the internet. This rise has assisted to remove the barrier between operational technology (OT) and information technology (IT). Hence, it enables the analysis of unstructured machine-generated data for insights to drive improvements.


IoT is a system of interrelated computing devices, mechanical and digital machines, objects, animals, or people. They are provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.

For instance, a thing may be;

  • A person with a heart monitor implant
  • An animal with a biochip transponder
  • An automobile that has built-in sensors to alert the driver when tire pressure is low

Or any other natural or man-made object with an Internet Protocol (IP) address, able to transfer data over a network.

The Industrial Internet of Things (IIoT) is the use of smart sensors and actuators to improve manufacturing and industrial processes. It is an important part of what is described as the Fourth Industrial Revolution (Industry 4.0). 

How it works?

An IoT ecosystem comprises web-enabled smart devices that use embedded systems, such as processors, sensors, and communication hardware. Thus, allowing them to collect, send, and act on data they acquire from their environments. 
IoT devices share the data from sensors by connecting to an IoT gateway. Occasionally, these devices communicate with interrelated ones and act upon the information they get.

Furthermore, the devices operate without human intervention, although people can interact with them. For example, to set up, give instructions or access the data.

The connectivity, networking, and communication protocols used with the devices largely depend on the specific IoT applications deployed.

Nonetheless, IoT can utilize artificial intelligence (AI) and machine learning. Hence, making data collecting processes easier and more dynamic.

IoT example
Figure. Example of an IoT system.
Why is IoT important?

Companies with IoT have a real-time look into how their systems really work. Hence, gain insights into everything from the performance of machines to supply chain and logistics operations.

IoT enables the automation of processes and reduction of labor costs. Moreover, it minimizes waste and improves service delivery, making it less expensive to manufacture and deliver goods, as well as offering transparency into customer transactions.

It is the key to the development in predictable maintenance, zero-failure vision, and improved efficiency in maintenance and service, energy management, and asset tracking.


The IoT offers several benefits to organizations. Some benefits are industry-specific, and some are applicable across multiple industries.
Some of the common benefits of IoT enable businesses to:

  • monitor their overall business processes;
  • improve the customer experience (CX);
  • save time and money;
  • enhance employee productivity;
  • integrate and adapt business models;
  • make better business decisions; and
  • generate more revenue.

Furtherly, it encourages companies to rethink their approach in businesses. While it provides the tools to improve their strategies.

Generally, IoT is most abundant in manufacturing, transportation, and utility organizations, making use of sensors and other devices.

Sensors, for example, could be used to monitor events or changes within ships, ports, and other infrastructure. Thus, benefit in terms of cost-saving, saved time, quality-of-life workflow changes, and paperless workflow.

A vessel operator can utilize IoT to monitor and manipulate mechanical and electrical systems in the ship.

Pros & Cons


  • Access information from anywhere at any time on any device;
  • Improved communication between connected electronic devices;
  • Data trabsfer packets over a connected network saving time and money;
  • Automating tasks helping to improve the quality of a business’s services and reducing the need for human intervention.


  • Hacking potential with the icreased number of connected devices and data transferred.
  • Huge amount (even millions) of devices, collecting and managing the data.
  • If there’s a bug in the system, it’s likely that will affect every connected device.
  • No international standard of compatibility – difficult for devices from different manufacturers to communicate.
Security & Privacy

Due to its expanded attack surface, IoT security and IoT privacy are major concerns.

Devices are closely connected, thus by exploiting one vulnerability, a hacker can manipulate all the data, rendering it unusable. In this regard, manufacturers need to update their devices regularly to avoid cybercriminals.

Additionally, connected devices often ask users to input their personal information, which is invaluable to hackers.

On the contrary, privacy is another major concern for IoT users. For instance, IoT device makers could use those devices to obtain and sell users’ personal data.

Beyond leaking personal data, IoT poses a risk to critical infrastructure, including electricity, transportation, and financial services.

Thoughts from the Nerd

Our planet has more connected devices than people. The IoT will transform the way vessels, ports, and humans interact with the rest of the connected world. But issues do exist.

As many new players enter the field, standards still are being set. But even with these challenges, the end goals of IoT have so much promise. LoRa has introduced IoT technology for shipping operations to improve efficiency in the maritime sector.

This trend will impact industries of all kinds, as well as our personal lives.