A thought provoking post here from Brad Hinton on Brad Hinton - Plain Speaking, which looks at some of the issues around measuring Knowledge Management. Brad argues that hard data (facts and figures) often doesn't represent what activities are being undertaken by Knowledge Management teams.
He goes on to say "We therefore often have a problem conveying the full story of our work in knowledge management since we do not always have the facts and figures senior executives want. We often provide information that is easy to collect but does not provide real meaning. The classic example is in using hit rates for intranet pages and web sites. High hit rates can often indicate confusion just as well as indicating purposeful traffic"
Brad goes on to discuss some of the techniques he uses to "Measure Knowledge Management". This is a really interesting article, which is well worth reading for an introduction to this area.