A method for advanced condition monitoring of an asset system includes monitoring a variable of an asset system using the at least one sensor of a smart sensor system; determining whether the asset system has departed from normal operation; and identifying the variable of the asset system indicating the departure from normal operation. In another method, the time sequential values of the monitored variable is analyzed by using a Rank Permutation Transformation test, a Hotelling's T2 statistic test, and a Likelihood Ratio Test; and a change of an operating condition of the asset system is determined using the analyzed values. An alert is provided if necessary. A smart sensor system includes an on-board processing unit for performing the method of the invention.