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Applications sometimes fail or experience performance degradations. If it’s a critical business application — an online order-taking system, for example — such a failure or decline in service can be a major blow to an organization. For some types of businesses, even a few hours of downtime can result in millions of dollars in lost sales, as well as angry customers, frustrated business partners and bad publicity.

The difficulty in monitoring how well an online application is performing is that an inherent problem with performance could be coming from any number of places within the IT infrastructure: the application itself, integration with a back-office system, Web servers, databases, network components or some other area. Given today’s complex IT environments, finding the cause of an application failure can be a major challenge.

Application performance management (APM) software helps organizations not only to identify the cause of a problem and do something about it, but also to work proactively to spot trouble before the end user is even aware that something is wrong.

The software is designed to detect and diagnose problems and then repair them, ensuring that application performance meets expectations. Some products provide end-to-end visibility into online transactions in real time, so businesses can have a constant view of how a front-end application — including the back-end applications and infrastructure supporting it — is working.

The market for APM tools is growing as more organizations come to realize the potential value of the software. “The need to have a view of how all things connected to the application are performing is what is sparking the growth of these application performance monitoring tools,” says Jasmine Noel, partner and founder of research and analysis firm Ptak Noel. “They enable you to see across all these different [IT components].”

Monitoring application performance is especially critical for companies such as online retailers and financial services firms that conduct a lot of transactions on the Internet. For example, with brokerages, throughput and speed of a transaction are especially important when high-stakes transactions are being made. But experts say APM can be useful for any type of organization that needs to provide a high level of application availability and performance.

“From an IT perspective, the benefit is that you will be able to see the problems as, or maybe a little before, the user starts to see them,” Noel says. “If you know the problem exists, you can start working on it before people start screaming at you.”

In addition to helping ensure application performance and availability, APM tools can enable organizations to get the most out of their IT investments by keeping systems running optimally. Another benefit, Noel says, is that IT staff can spend less time looking for and fixing problems and more time working on strategic initiatives.

And at a time when many organizations are looking for ways to reduce risk, APM tools can play a leading role in IT-related risk management by helping to prevent outages that could result in financial loss and negative publicity for the organization.

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