A type of performance measurement (also Key Performance Indicator, KPI). KPIs evaluate the success of an organization or of a particular activity in which it engages ( http://en.wikipedia.org/wiki/Performance_indicator Wikipedia)
Purpose & benefits
To help monitor the operations/processes/activities of the organisation in order to ascertain the degree to which it is meeting it's goals and objectives.
Performance indicators are an important part of ensuring the technology is aligned with the business needs. Understanding what the business needs to measure helps to identify the data that needs to be collected as part of the technology. In fact, that the technology must be able to collect data and report on it in order to meet business needs and objectives is itself a requirement.
A performance indicator is often one of a set of indicators that are collected to monitor the operations and activities of the organization to determine how well or poorly it is achieving it's goals and objectives.
Performance indicators can be used to determine the success of the KM program/activities; metrics should be carefully chosen and monitored, keeping in mind that "what gets measured gets done", which can lead to undesirable outcomes and behaviours.
Performance indicators should be clearly formulated and should be in line with organizational goals. Performance indicators can be formulated for organizations, teams or individuals. In a simplified approach, if people are paid biased on their performance, performance indicators should be substantial, clearly formulated in terms of quality, quantity and/or productivity.
For implementing KM initiatives performance management is very important to avoid cases like KM officer is paid for facilitating collaborating and information exchange and IT officer is paid for protecting information and restricting access to information sources. Their motivation is different and without a common vision and common performance indication their affords will be contradictory.
Metric, Key Performance Indicator (KPI), Key Success Factor (KSF)