The disclosure provides Internet of Things (IoT) systems organized as tree hierarchies in which rule processing can occur at each level of the tree hierarchies. In the IoT system according to one embodiment, formulas are defined and centrally managed at a cloud hub that is a root of a tree hierarchy. Each formula defined at the cloud hub is further percolated down to a hub, which may be the cloud hub itself or a local hub, in the tree hierarchy that is logically closest to devices specified in the formula. Each of the cloud and local hubs in the IoT system may utilize the same core IoT platform image, providing ease of management. In addition, formulas may be defined with basic stimuli and responses, as well as with higher-order stimuli and responses that combine one or more other stimuli and responses, respectively.