By Bob Violino

When a key business application fails to perform, the results can be ugly: lost sales, dissatisfied customers, unhappy business partners and reduced productivity, to name a few. For any company that relies heavily on online transactions, the failure of such applications can lead to substantial losses of revenue, productivity and customers. For example, online shoppers who encounter a malfunctioning ordering application on a merchandise site will likely take their business elsewhere.

A technology called Application Performance Management (APM) can help. Companies that use APM are more likely to satisfy important customers, business partners and others by effectively ensuring that their Web and other applications run at peak performance 24x7. APM can help organizations improve their sense of what customers are actually experiencing when they use the organization's online applications.

Some APM solutions offer end-to-end visibility into customer transactions in real time. These solutions enable an organization to successfully manage the health and availability of its critical applications and infrastructure. This ability, in turn, helps the organization improve customer service, produce more stable revenue streams and increase productivity.

Experts say APM solutions should be particularly appealing to companies that do a lot of business online. "When an application goes down, especially in the online retail world, it becomes a news story," says Jasmine Noel, partner and founder of Ptak, Noel and Associates, a New York research and analysis firm that covers IT trends. "Folks are trying to get smart about how they manage their applications so those sorts of stories don't happen."

Although online retailers gain unwanted attention when their Web applications fail or perform at a less-than-optimal level, the need for APM applies to many different industries. The need covers both front-end Web applications and the back-office applications that support a variety of business processes. Depending on the business and application, even a few hours of application downtime can turn into millions of dollars of lost revenue and decreased productivity, Noel says.

Money Talks
The financial services sector is one area in which monitoring application performance is especially crucial. "Throughput, latency and speed overall are becoming increasingly important in financial service applications," says Jeromee Johnson, senior research analyst at TABB Group, a financial-services research and advisory firm in Westborough, Mass. "The performance management of trading applications is of particular importance because of the speed of the markets. Market data is coming at faster rates."

In addition to ensuring that their applications are performing well at all times, companies want to be certain that they're getting the maximum benefits from the applications they have purchased or developed. That's true whether the application runs online sales, supply chain management, employee benefits programs or some other function.

Application Performance Management has become increasingly important because of the growing intricacies of IT infrastructures and networks. "The number of different technologies that actually go into delivering the application is incredibly complex and getting more complex," analyst Noel says. "That's the rub. It's not just like [Microsoft] Word sitting on a desktop. These applications are linked to a whole bunch of components: networking, Web servers and databases. There's a complex web of stuff that delivers that nice, simple application you use to buy shoes."

The electronic supply chain networks that companies have built have created efficiencies that enable them to offer goods and services to customers at lower prices. But if the group of applications supporting that network doesn't deliver, there could be big problems, Noel adds.

Yet many organizations — even many large global enterprises — lack adequate end-to-end visibility into how their critical online applications perform, according to Patrick Chang, director of product management at CA Wily Technology. "Any enterprise that relies on Web applications needs a detailed view of transactions if it intends to succeed," he says.

Even among IT organizations that have proactive monitoring capabilities for key applications, many are still learning how to leverage transaction data to track service levels for business users, Chang adds.

Noel agrees that end-to-end visibility into customer transactions in real time is critical. There are times when all the various technology components that support customer transactions appear to be running well, but the online transaction isn't working as it should, she says. "That is what makes people realize that we can't manage those complex applications the way we used to in silos," Noel says. "We have to figure out ways to give people better insight as information moves through all locations."

Visibility is necessary for risk management, especially in the financial services industry, says Johnson of TABB Group. "This is particularly important when dealing with institutional customers and institutional-size orders," he says. "These organizations are using increasingly complex trading strategies and instruments. They're shorting, hedging and creating new derivatives. The sell side needs to support this trading in the most appropriate way, while not slowing down its customers' business."

Solution Seeking
CIOs should evaluate a service quality management solution that includes APM, incident and problem management, and service level management capabilities. The solution should allow for the monitoring of performance and availability of applications, portals and service-oriented architectures (SOAs). It should also automate the workflows needed to troubleshoot and resolve service performance and availability issues and provide CIOs with a way to manage incidents and problems, as well as support automation and change. The analysis function within the solution helps to define service offerings in business terms, with appropriate quality parameters and financial transparency, through the use of an IT service catalog.

Also, CIOs can use service quality management to create Service Level Agreements (SLAs) for specific applications, transactions or groups of users. Then they can measure the actual performance of these applications based on customer experience metrics. Directly connecting the transaction performance information with the SLAs "provides the ability to notify operations and initiate remediation activities before SLAs are violated, thus improving the quality of service to the business," explains Don LeClair, CA's senior VP of development.

In fact, service quality management can also help CIOs ensure that their IT services are properly aligned with the organization's business goals and determine whether their IT services are aligned with best practices that may be in use, including the Information Technology Infrastructure Library (ITIL®) and Six Sigma quality initiatives.

One such solution is CA Service Quality Management. It provides CIOs a complete view of all IT services delivered to the business. This solution is part of CA's integrated approach to governing, managing and securing IT services, known as Enterprise IT Management (EITM).

360-Degree View
The centerpiece of EITM is the Unified Service Model. It provides CIOs with a complete, 360-degree view into the technology, assets, people, projects and processes supporting any given service. The model also gives a view of the relationships among these components. "The Unified Service Model supports our key goals of unifying and simplifying IT management activities," says LeClair. "This has the practical benefit of making management more proactive."

For APM, the Unified Service Model also maintains the linkage between the discovered applications — and the various components that support them — with actual transactions that the applications support, and from there to the associated Service Level Agreements, LeClair explains. Directly connecting the transaction performance information with the SLAs "provides the ability to notify operations and initiate remediation activities before SLAs are violated, thus improving the quality of service to the business," he adds.

BEA Systems Inc., a provider of enterprise infrastructure software, lists CA's APM technology as a supported platform for its Web Logic Server middleware product. Also, BEA actively promotes APM as the preferred solution for performance metrics for WebLogic, says Jim Sherburne, BEA's director of product marketing.

What's more, BEA rolled out a virtualized edition of WebLogic server in June, and it is now evaluating how to tie that product to APM. With virtualization, "you can't talk about performance optimization unless you have a set of valid metrics to go along with it," Sherburne says.

There's a huge potential downside to not using a solution such as APM to manage the performance of online and back-office applications: damage to the reputation of the company. The failure to deliver continuous access to the products and services the company offers has a negative impact on perception and introduces a real possibility of lost business. "If you're trying to download a new ringtone for your cell phone from a well-known telco, and you get an error message, you're going to go to a competitor," Chang of CA Wily warns.

Beyond basic application uptime and availability, organizations also need to optimize the performance of their applications from an end-user perspective. "If applications are difficult to navigate," Chang says, "then people won't execute purchases, and your company risks the loss of revenue."

Other considerations are the time and resources needed by the IT department to find and fix problems associated with application performance. Given the complexity of today's Web application environments, organizations want the times for key metrics — such as mean time to repair — to be as short as possible, Chang says. Without APM, those figures could be much higher. "The more time spent on these problems," he adds, "the less time spent on developing new applications."

When done right, APM can help CIOs see their own online applications from the customer's point of view. This subtle shift can allow CIOs to help their organizations dramatically improve customer satisfaction, boost retention rates and increase profitability. For CIOs and their organizations alike, that should be a refreshing change of perspective.

Bob Violino is a freelance writer based in Massapequa Park, N.Y. He covers a variety of business and technology topics.