Coordinating tasks of performance management and application placement management in a dynamic fashion by: estimating capacity needs for various service classes of service requests; computing desired capacities of at least one application for said service requests; deciding whether the desired capacities are satisfied by a current application placement; making no change to current application placement if the desired capacities are satisfied; determining a new application placement based on the desired capacities and a projected load if the desired capacities are not satisfied; computing corresponding capacity constraints for all pairs of service classes and servers; and computing an optimal allocation of capacities among the service classes so as to optimize a quality of service.