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The 5 Layers of the IoT Technology Stack

I call these blocks the 5 layers of the IoT Technology Stack. Once you get familiar with the IoT technology stack, you’ll see that there’s nothing magical about IoT. It’s just sensors, computers, and networks put together. By the way, all IoT products have these 5 layers, regardless of whether they are consumer or industrial products.


Later in this post, I’ll also describe how you can use this conceptual model to interact with your team, customers, and vendors. But first, let’s talk about the IoT Technology Stack.

Introducing the 5 Layers of the IoT Technology Stack

The first step to becoming an IoT Product Manager is to understand the five layers of the IoT technology stack. By breaking down a full IoT solution into these five layers, Product Managers can better understand and analyze the business and technology tradeoffs that are needed at each level, and in the system as a whole. These five layers are:

Now let’s use the wind turbine example to describe in detail each of the layers of the IoT technology stack.

Layer 1 – Device Hardware

Devices constitute the “things” in the Internet of Things. Devices act as the interface between the physical and digital worlds. They are the first layer of the IoT technology stack.

The first thing to consider is whether your product is the connected device itself (i.e., the Nest thermostat) or your product is turning an existing device into a connected device by adding instrumentation (i.e., adding sensors and communication to a wind turbine). In our example, you’re not selling the wind turbine, just the device that connects to the wind turbine. In other words, our wind turbine example is a “brown field” solution.

One of the main goals of your device is to collect data. So next, you need to think about what data to collect and therefore what device hardware you need to do that.

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Layer 2 – Device software

The device software is the component that turns the device hardware into a “smart device.” Device software is the second layer of the IoT technology stack.

Device software enables the concept of “software-defined hardware,” meaning that a particular hardware device can serve multiple applications depending on the embedded software it is running.

Device software allows you to implement the communication with the Cloud or other local devices. You can perform real-time analytics, data acquisition from your device’s sensors, and even control.

This layer of the IoT technology stack is critical because it serves as the glue between the real world (hardware) and your Cloud Applications. It’ll be up to you and your team to decide how much functionality you place here versus in the Cloud.

Layer 3 – Communications

Communications refer to all the different ways your device will exchange information with the rest of the world. Communications are the third layer of the IoT technology stack. Depending on your industry, some people refer to this layer of the IoT technology stack as “connectivity.” In this post, I’m using the more generic term “communications,” but I’m referring to the same thing.

Communications include both physical networks and the protocols you will use. It is true that the implementation of the communications layer is found in the device hardware and device software. But from a conceptual model (not implementation model), I prefer to keep Communications as it’s own layer in order to facilitate discussions with the rest of my team.

Layer 4 – Cloud Platform

The cloud platform is the backbone of your IoT solution. If you are familiar with managing SaaS offerings, then you are well aware of the role of this layer of the IoT technology stack.

A Cloud platform provides the infrastructure that supports these critical areas:

Data Collection and Management

Your smart devices will stream information to the Cloud. As you define the requirements of your solution, you need to have a good idea of the type and amount of data you’ll be collecting on a daily, monthly, and yearly basis.

One of the challenges of IoT applications is that they can generate an enormous amount of data. You need to make sure you define your scalability parameters so that your architects can determine the right data management solution from the very beginning.

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Layer 5 – Cloud Applications

This fifth layer of the IoT technology stack is the most easily understood by Product teams and Executives. Your end-user applications are the part of the system that your customers will see and interact with. These applications will most likely be web-based, and depending on your user needs, you might need separate apps for desktop, mobile, and even wearables.

Even if your smart device has its own display, your customer is very likely to use a cloud application as their main point of interaction with your solution. This allows them to have access to your smart devices anytime and anywhere, which is part of the goal of having connected devices.

Product Managers must understand your users and the “job to be done” of your product. When designing your end-user applications, it is very important to understand who is your user and what is their primary goal of using your product. Keep in mind that for Industrial IoT applications, you’ll probably have more than one user.

What about “the Edge”?

You’ve probably heard the term “edge” thrown around alongside IoT. Edge refers to “edge computing,” which is the ability to perform analytics or some other computational work closer to where your sensors are.

The question I often get is: Why didn’t you include the edge as one of the layers of the IoT technology stack? That’s a great question! And the answer is just: simplicity.

In this post, I’m presenting a conceptual model of the IoT Technology Stack to help you in conversations with all your stakeholders and customers.