Data is collected from the controlled system, the data is analyzed to gain knowledge of whether the system is behaving according to the expectations, and action is taken, if required, to influence the system's behavior to match the expectations. As a result of a closed loop operation, the outcome will meet the set target.
Many Internet of Things (IoT) approaches focus on data collection (sense) and analysis. However, it is to be noted that all the value is finally generated in the physical world. Energy, material, or time is saved, or more is produced. Therefore, the knowledge gained from the analysis has to be put into action, i.e. the improvement has to be implemented. Only by closing this loop, value is created.