The Internet of Things (IoT) is the Internet extended into the physical world. Its function is to collect data and transform it into useful information. Its purpose is to improve products, services and companies by creating value, generally through innovation, operational efficiency, asset utilization and invention. It is the basis of digital transformation when applied to the products, services and operations of physically-based companies.

An IoT ecosystem consists of web-enabled smart devices that use embedded processors, sensors and communication hardware to collect, send and act on data they acquire from their environments. IoT devices share the sensor data they collect by connecting to an IoT gateway or other edge device where data is either sent to the cloud to be analysed or analysed locally.