1. A method for monitoring performance of an application system which is distributed across a plurality of network connected nodes, comprising: generating a hierarchical model for the application system, the hierarchical model having a plurality of levels, each level including components having a span of network connected nodes specific to that level; mapping the application system onto the hierarchical model according to a network topology of the application system; using a processor, monitoring network traffic between the plurality of network connected nodes of the application system to gather network traffic data; assembling the network traffic data into application messages; correlating the application messages into sets of one or more application messages that are associated in accordance with the hierarchical model and that constitute transactions corresponding to a lowest level of the hierarchical model; and, generating records of individual transactions occurring within the application system for at least the transactions corresponding to the lowest level of the hierarchical model.