What is the Internet of Things (IoT) and How Does it Work? 

The Internet of Things (IoT) is a network of physical devices that connect and exchange data with other devices and systems over the Internet. These interconnected “smart” devices range from household items to sophisticated industrial tools, each gathering and sharing valuable data.  

IoT is transforming the business landscape, enabling companies in various industries to streamline operations, cut costs, and enhance customer experiences. With the increasing risk of cyber threats, securing these IoT devices is just as important as using them. Protecting these devices from unauthorised access and data breaches is essential to continue using their capabilities for business growth. 

In this guide, we explain what the Internet of Things (IoT) is, how it works, and what industries benefit from it. We also highlight the importance of secure IoT for businesses, and how you can ensure data integrity with Nexus GO IoT.  

What is Internet of Things (IoT)? 

The Internet of Things (IoT) is a network of physical objects that are embedded with sensors, software, and other technologies to connect and exchange data with other devices and systems over the Internet. By enabling these devices to gather and exchange information, IoT transforms them into intelligent systems capable of more than their standalone functions. 

IoT devices collect data through their sensors, which is then transmitted over the internet to a central system or cloud server. This data is processed and analysed, and the insights gained can be used to automate actions or inform decisions.  

In households, IoT devices include smart thermostats, connected security cameras, intelligent lighting systems, and smart appliances like refrigerators that can send you shopping lists. In the business world, IoT devices are more expansive, ranging from smart sensors in manufacturing equipment to fleet management tools in transportation to inventory tracking devices in retail. 

Why is Internet of Things (IoT) so important? 

IoT makes everyday objects smarter by enabling them to respond to changing conditions without human intervention. This capability makes it extremely beneficial for businesses.  

Improved efficiency  

IoT plays a pivotal role in optimising business operations. It allows companies to monitor and control their processes in real time, enhancing production efficiency, and minimising errors.  

Data-driven decisions  

IoT's data-gathering capabilities are invaluable for businesses. By collecting data from various sources and analysing it, businesses can gain insights that were previously inaccessible. This data-driven approach can lead to innovations in services, products, and processes. 

Cost savings 

IoT offers opportunities for cost savings in various business aspects. For example, IoT-driven inventory management can reduce excess inventory levels, reducing unnecessary storage expenses. By incorporating IoT devices, businesses can improve their overall financial efficiency.  

Enhanced customer experiences 

Businesses can leverage collected data from IoT technologies to offer personalised products and services to customers. For example, an automobile manufacturer can use IoT-connected sensors to remotely diagnose and fix issues in a customer's vehicle. These enhancements lead to increased customer satisfaction and loyalty, which can turn into higher earnings. 

What technologies have made IoT possible? 

The capabilities of IoT are due to advancements in several key technologies. These technologies facilitate the connection of various devices and ensure the efficient collection and sharing of data.  

Here are the technologies that enable IoT to exist:  

Cloud computing platforms 

Cloud computing platforms are where the data collected by IoT devices is stored, processed, and analysed. Without cloud computing, interpreting IoT data effectively would be impractical. This helps in making data-driven decisions from IoT devices.  


Connectivity enables IoT devices to communicate with each other and with centralised systems. This involves various technologies like Wi-Fi, Bluetooth, cellular networks, and even newer forms like Low-Power Wide-Area Networks (LPWAN). Efficient and reliable connectivity is vital for the timely and secure transmission of data. 

Machine learning and analytics 

Machine learning and analytics turn raw data from IoT devices into valuable insights. These technologies allow for the analysis of vast amounts of data generated by IoT devices, identifying patterns and trends that would be otherwise impossible to identify. This capability enables predictive maintenance, energy management, and many other applications. 

Low-cost, low-power sensor technology 

The development of low-cost, low-power sensor technology has been a significant driver of IoT growth. These sensors are the primary data collection points in IoT systems, detecting everything from temperature and humidity to motion and light. Their affordability and efficiency have enabled the widespread adoption of IoT across various sectors. 

Conversational AI 

Conversational AI, such as voice assistants and chatbots, has enhanced the user experience in IoT. Users can receive personalised recommendations, ask questions, and control devices through conversational interfaces. This has made IoT technologies more accessible and user-friendly. 

What industries can benefit from IoT? 

IoT's ability to connect devices and systems has implications for efficiency, safety, and innovation in numerous sectors. From manufacturing to healthcare, IoT is changing how businesses operate and how services are delivered. 


IoT devices have transformed the manufacturing sector. From the supply chain to the factory floor, IoT devices can connect various aspects of the manufacturing process. This has enabled a new level of efficiency in manufacturing. For example, IoT sensors can be installed on machinery to monitor conditions like temperature and vibration in real time. These sensors alert the maintenance team to potential issues, enabling preventive maintenance and minimising downtime. 

Transportation and logistics 

In transportation and logistics, IoT enables better management of fleets, optimisation of routes, and real-time tracking of goods. For example, sensors and GPS technology ensure that vehicles are operating efficiently and that goods are delivered on time and in good condition. The ability to track goods throughout the supply chain also increases transparency for customers, boosting satisfaction. 

IoT also helps in reducing operational costs and environmental impact. By monitoring vehicle health and driving patterns, companies can save on fuel costs and reduce emissions.  


In the retail industry, IoT is revolutionising the way businesses manage inventory and interact with customers. For example, smart shelves equipped with sensors can automatically track stock levels, alerting staff when items need replenishing. This ensures that customers always have access to the products they need, enhancing their experience.  

IoT also enables personalised shopping experiences. For example, IoT devices can provide customers with tailored recommendations based on their shopping habits and preferences. This level of personalisation can increase customer satisfaction and drive sales.  


The healthcare sector benefits significantly from IoT. Wearable devices can monitor patients' vital signs in real-time, providing doctors with valuable data for diagnosis and treatment. IoT devices also enable remote patient monitoring, allowing healthcare providers to track patients' health outside of traditional clinical settings. 

IoT in healthcare can assist with better resource management and patient care. For example, IoT-enabled devices can ensure that medical equipment is functioning correctly and is available when needed. This improves the efficiency of healthcare delivery and enhances patient outcomes.  

Public sector 

The public sector is leveraging IoT to create smarter and more efficient cities. IoT applications in this sector include traffic management, waste management, and public safety. For example, sensors can monitor traffic flow and adjust traffic signals in real time, reducing congestion and improving road safety. 

IoT also plays a crucial role in environmental monitoring and sustainability. Sensors can track air and water quality, helping cities to manage pollution and protect public health.  

Secure your IoT Network with Nexus Group 

IoT technology offers numerous benefits to businesses by providing access to invaluable data. However, with the increasing threats of cyber-attacks, maintaining the security of that data becomes increasingly important. Any breach in IoT security could lead to devastating consequences.  

Nexus Group offers Nexus GO IoT, an IoT security solution with robust authentication, encryption, and access control mechanisms. Nexus GO IoT helps in creating a secure IoT framework by authenticating and authorising device access, encrypting data during transmission, and establishing secure communication channels within IoT networks. 

Get in touch to integrate Nexus GO IoT for a secure IoT network.  

FAQs about IoT 

What is an example of the Internet of Things (IoT)? 

A common example of IoT is a smart thermostat in homes. It learns the homeowner's schedule and adjusts the temperature accordingly, leading to enhanced comfort and energy efficiency. It can be controlled remotely and provides data on usage patterns. 

Is IoT the same as AI? 

IoT refers to the network of interconnected devices, while AI involves creating machines that can perform tasks that typically require human intelligence. AI is often used in IoT for data analysis and decision-making. 

Can IoT work without Internet? 

IoT relies on Internet connectivity to function. Some IoT systems can operate on a local network without Internet, collecting and processing data independently. These systems may not offer full functionality without Internet access.