PAMELA (Phased Array Monitoring for Enhanced Life Assessment) SHM System is an integrated embedded ultrasonic guided waves based system consisting of several electronic devices and one system controller. The data collected by all PAMELA devices in the system must be transmitted to the controller, who will be responsible for carrying out the advanced signal processing to obtain SHM maps. PAMELA devices consist of hardware based on a Virtex 5 FPGA with a PowerPC 440 running an embedded Linux distribution. Therefore, PAMELA devices, in addition to the capability of performing tests and transmitting the collected data to the controller, have the capability of perform local data processing or pre-processing (reduction, normalization, pattern recognition, feature extraction, etc.). Local data processing decreases the data traffic over the mesh network and allows CPU load of the external computer to be reduced. Even it is possible that PAMELA devices are running autonomously performing scheduled tests, and only communicates with the controller in case of detection of structural damages or when programmed. Each PAMELA device integrates a software management application that allows to the developer to download his own algorithm code and to add the new data processing algorithm to the device. The development application is done in a virtual machine with an Ubuntu distribution including all necessary software tools to perform the entire cycle of development. Eclipse IDE (Integrated Development Environment) is used to develop the project and to write the code of each data processing algorithm. This paper presents the developed software architecture and describes the necessary steps to integrate new embedded data processing algorithms inside PAMELA devices.