If you are using VMware vSphere, VMware ESXi cannot see application latency because it is above the ESXi stack. What ESXi can do is detect three types of latency that are also reported back into esxtop and VMware vCenter.
Average guest latency (GAVG) has two major components: average disk latency (DAVG) and average kernel latency (KAVG).
DAVG is the measure of time that I/O commands spend in the device, from the driver host bus adapter (HBA) to the back-end storage array.
KAVG is how much time I/O spends in the ESXi kernel. Time is measured in milliseconds. KAVG is a derived metric, which means that there is no specific calculation for it. To derive KAVG, subtract DAVG from GAVG.
In addition, the VMkernel processes I/O very efficiently, so there should be no significant wait in the kernel, or KAVG. In a well-configured, well-running VDI environment, KAVG should be equal to zero. If KAVG is not equal to zero, then the I/O might be stuck in a kernel queue inside the VMkernel. When that is the case, time in the kernel queue is measured as the QAVG.
To get a sense of the latency that the application can see in the guest OS, use a tool such as Perfmon to compare the GAVG and the actual latency the application is seeing.
This comparison reveals how much latency the guest OS is adding to the storage stack. For instance, if ESXi is reporting GAVG of 10 ms, but the application or Perfmon in the guest OS is reporting storage latency of 30 ms, then 20 ms of latency is somehow building up in the guest OS layer, and you should focus your debugging on the guest OS storage configuration