The letters SQM originally stood for Service Quality Monitoring, but that doesn't really answer the question, "What is SQM?"
To me, what raises this beyond just an internal code name to the level of Microspeak is that the term has become linguistically productive. In addition to the term SQM being used to refer to the technology itself, you can also find it used as a verb: "The information gets SQMmed once a month." "Can we SQM this data?"
The letters SQM are pronounced as if it were spelled squim, which happens also to be the pronunciation of the Washington town Sequim. Along with Enumclaw, Puyallup, and Tulalip, Sequim is a Washington place name which is used to distinguish the locals from the outsiders. I strongly suspect that whoever came up with the name SQM did so specifically as a tribute to the town best known for its annual lavender festival.
Bonus history: At some point, somebody decided that the letters SQM no longer stand for Service Quality Monitoring; they now stand for Software Quality Metrics. That this change occurred without anybody noticing proves that nobody really cares what the letters stand for in the first place. I've heard from multiple sources that the original name came from the MSN team.