IoT, how does it become valuable?

In our previous post we provided the high-level perspective of the technologies involved in an IoT solution. We also provided some caution against focusing too much on the technology, and losing focus on what’s important, which is the valuable information that comes from the IoT solution.

In this post we will discuss how the IoT technology can transform the sensor data into valuable information.

Here is a quick review of the technologies involved in an IoT solution:

  • Sensors and embedded systems on the things you measure in your company or on the things you measure in your customer’s environment
  • Data that comes from those sensors and embedded systems
  • Networks over which that data is transmitted
  • Software used to collect, coordinate, process, store, and present the data
  • External systems from which other data is collected which will add value to the sensors sourced data
  • Analytics for transforming all the data into valuable information
  • Security to protect the data and all related systems

Now let’s talk briefly how this technology can transform the data into incredible value for vendors and customers alike.

There are parts of the IoT solution which help transform the data into valuable information:

  • Software platform: The IoT software platform is the glue that holds the solution together. It is the hub for moving, storing, adding, and transforming the data.
  • Digital twin: The digital twin is a virtual model which represents the things from which data is pulled, about which the data is analyzed, etc. The digital twin organizes and encapsulates all the data and logic for storing, adding, and transforming the data in such a way as to achieve the goals of the IoT solution. The user of the IoT solution then obtains the information by accessing it through the digital twin.
  • External data: Data from the devices can be made more valuable by combining it with data from other areas of the organization such as an ERP system, personal health information system, or from the web such as weather, stock prices, etc.
  • Machine Learning/AI: Machine learning and artificial intelligence provide new ways of understanding the meaning in data, looking forward into the future, and going as far as prescribing what can be done to improve certain situations.
  • Top-down focus: The IoT solution should be built from the top down. The desired outcomes and the information to obtain from the solution should be defined first. Then one should work backwards towards the data and sensors. Often companies start with the sensors and data to create. They most often end up with an expensive tangled mess of an IoT solution which doesn’t deliver the desired result.

These IoT components are what transform data into valuable information. The new information makes IoT a game changer for business and consumers. Never before has this combination of technologies been available at the same time.


Let’s go back to the example of the backup power generator to understand how this data transformation takes place.

One example is the IoT solution can now pull data from an external weather service, run additional tests on the unit before severe weather, and call service technicians automatically if an issue is found. That additional assurance could be more valuable than the monthly tests, especially if the failure conditions were to occur between the last automated test and the next severe storm.

Machine learning is another example of the value added by IoT. Predictions are only possible because data scientists and domain experts put their knowledge in the form of algorithms into the data analysis tools. The applications are then able to identify normal conditions in the data, detect abnormal conditions, tie those abnormal conditions to a certain issue, derive a cause, and potentially take an action. That action could be showing an alert, creating a work order in a work order management system, or telling the device to do something to prevent failure.


The combination of these technologies as components, with the help of the team that puts the solution together (e.g., data scientists, domain experts, software developers, etc.), then convert the data from sensors into valuable information such as warnings and action. With the right warnings and the right time, and the right preventative actions taken, companies can work more efficiently and focus their valuable resources on development and growth rather than crisis management. That’s where the advantage of implementing IoT really shines.