Because virtual machines work by time-sharing host physical hardware, a virtual machine cannot exactly duplicate the timing behaviour of a physical machine. This leads to the timekeeping problems explained in the VMWare White Paper about Timekeeping in Virtual Machines that results in inaccurate time measurements within the virtual machine. This affects ALL performance metrics that rely on the operating system clock time to keep track of time which includes system counters like CPU or I/O Utilization. Performance Management solutions therefore run into the problem that the monitored metrics are inaccurate and can lead to incorrect enforcement of SLAs or wrong assumptions about application performance. This blog explains the time keeping problem, how it impacts Application Performance Management in virtualized environments and what can be done to solve this problem.