Netflow is a cisco IOS application which can collect information of IP traffic.
Netflow can maintain detailed log of network resources.
It can measure who is using which resources for which purpose
Based on the usage of NetFlow analyzers, you will be able to identify the following:
– The major users of the network
– The websites that are routinely visited and what is downloaded
– Who is generating the most traffic
– If you have enough bandwidth to support mission-critical activity
– Who is using excessive bandwidth

NetFlow components are
– Network devices that are configured for NetFlow
– NetFlow Collector, which receives NetFlow information from network devices

Steps to congigure Netflow
Configure Netflow data capture
Configure Netflow data export
Configure Netflow data export version
Verify Netflow, its operation and statistics

R1(config)# int gi0/0   [enabling netflow in router interface]
R1(config-if)# ip flow ingress  [traffic recevied]
R1(config-if)# ip flow egress   [traffic transmitted]
R1(config-if)# exit
R1(config)# ip flow-export destination x.x.x.x 9996  [x.x.x.x is IP of network server that stores data for analizing and 9995 is default UDP port]
R1(config)# ip flow-export version 9  [9 is most versatile data format]

configuration check status:
R1# show ip flow interface
R1# show ip flow export
R1# show ip cache flow