As all kinds of transducers are being connected in different IoT (Internet of Things) applications, varied sensor data need to be collected and transmitted via network for further processing. To facilitate the process for signal or data treatment, there is the need to regulate a protocol for the local data processing for a smart transducer in terms of its computational capabilities. This paper reports the work on developing ISO/IEC/IEEE P21451-001 standard for signal and data treatment in smart transducer applications. The overall architecture for the standard and a two-layer implementation is described. The key algorithm, i.e. real-time segmentation and labeling (RTSAL) is illustrated with an example. The role of P21451-001 in the whole standard is highlighted and understood.