IoT explained... in under 100 words

The Internet of Things (IoT) is a new and slightly vague concept that everyone talks about but no one quite understands – quite a surprise perhaps given that the IoT has already been part of our daily lives for many decades. Computers, industrial machinery and planes are among the products that have been historically collecting data – starting today’s massive breakthrough.

While IoT solutions have been around for a long time, a reduction in hardware costs and battery consumption, an increase in communication bandwidth and the proliferation of powerful IoT platforms have all paved the way for the IoT to become one of today’s hot technology topics.

As part of our "Technology Decoded" series, let's take a look at the Internet of Things and explain how it works – as promised in less than 100 words!

You purchased a brand new car (a “thing”) from Manufacturer X, which is equipped with sensors that provide X with data through an Internet connection.

The data collected from the car gives X insights about daily usage characteristics, such as average speed or fuel consumption. X can then analyze this data and compare it with typical user behavior, to monitor for component deterioration – for example of engine parts or tires. X can recommend maintenance schedules for your car, or suggest additional features for your next purchase.

X can now learn from all its customers and improve its future car generations.

Here's Edmond Toutoungi explaining the Internet of Things in 2 minutes

The Internet of Things refers to a world of products that are connected to a network, such as the Internet, a company intranet or a network using industrial communication protocols. IoT products can be anything, from an iPhone, to a wind turbine, to a refrigerator, as long as they have a way of communicating to a ‘home base’, to send or receive data. Connected products generate data for automating business processes or enabling new services. This data can be used to improve the technical characteristics or the usability of a product, or to offer new services to customers, or it can be sold to a third party.

In essence, the Internet of Things can be said to have four elements:

  • Things: Physical devices and objects intelligently connected
  • Processes: Delivery of the right information to the right place at the right time 
  • Analytics: Individual data streams processed and analyzed with algorithms
  • People: Users gaining valuable insights about their Things, or being provided with relevant services

At an industrial level, connected equipment can also be used to improve the operational efficiency of a process, to fix processing problems faster, or to predict and prevent equipment failures. Data from industrial environments has been collected for more than 30 years (in industrial automation systems), but only recently have we started to make greater sense of it, using tools such as machine learning and analytics – topics that will have their own upcoming Elevator Pitches.

The Internet of Things should be viewed as a technology enabler to respond to customer pain points. It offers the possibility of understanding, correcting, and improving customer outcomes through analysis of data. IoT will acquire this data and transform it into insights, to create a win-win situation for both users and manufacturers.


Dr Oliver Baecker - Director | +41 58 279 6781

Edmond Toutoungi - Senior Consultant | +41 58 279 7801

Is your business ready for IoT?

To harness the full potential of the Internet of Things (IoT), companies need to react to a paradigm shift in the value creation of an enterprise. IoT is driven by digitisation, advanced analytics & technologies and has a disruptive impact on how we interact with increasingly smart and connected devices.

Find out more about Deloitte's IoT practice

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