An entity is an IT infrastructure component, such as:
A physical or virtual server
A network device (switch, router)
A user (AD/LDAP)
A storage system or volume
An operating system process
A software application (database, web server, business app)
An application process instance (for example, 2 instances of the same web server application is 2 separate entities)
Each entity has specific attributes and relationships to other IT processes that uniquely identify it. For example, a server that you define as an entity can have multiple IP addresses, MAC addresses, DNS names, and so on.
Meanwhile, KPIs help you monitor the status of these various IT components by monitoring performance metrics, such as CPU load percentage, memory used percentage, response time, and so on.
For information about key ITSI concept, like entities and KPIs, see: https://docs.splunk.com/Documentation/ITSI/latest/Configure/KeyConcepts
For information about the entity split field, see: https://docs.splunk.com/Documentation/ITSI/latest/Configure/AddKPIs#Step_3:_Filter_entities
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