In IoT, the physical devices connected to the network are transmitting data over the internet. How is this data collected and analysed? Are there specific algorithms or procedures in doing so?
This is an interesting question. You can get data by the data collection tools, which include sensors, phones, gps and others. And there are many analysis tools like HBase, Mahout, Chukwa and ZooKeeper, It's very useful tools for data analysis.
Data is typically collected via Gateways that forward the data to cloud platforms. Big data tools (e.g. Spark & Hadoop) store large sets of data to enable analytics queries. Now, neural inspired hardware (chips) are being developed to process data on the flow, instead of storing it at data centers.
I suggest you to read the article "Internet of Things (IoT): A Review of Enabling Technologies, Challenges, and Open Research Issues". It is available online at
https://authors.elsevier.com/a/1XTwy4xsUrrsRR or
Article Internet of Things (IoT): A Review of Enabling Technologies,...