In the last two hundred years or so, since the invention of the steam engine to the present, humanity and the world economy have been marked by four industrial revolutions. The fourth industrial revolution (industry 4.0), as the word itself says, has revolutionized the business based on artificial intelligence. Business organizational entities just like all other organizations with defined mission and existence reason, in order to survive in the future, must evolve to suit changed circumstances with no possibility of choice. Digital transformation of organizations, whether in the commercial sector or within the public sector is a ultimate condition for rational and efficient business. Therefore, it is the responsibility of the management and managerial structures to find optimal solutions regarding the implementation of a digital transformation in business. Unfortunately, there are still managers and employees responsible for the operations of organizational entities who are not aware of digital transformations full potential and benefits that digital transformation brings. In situations where managing (ownership) is separate from management, and management is most simply defined as achieving goals with the help of others, the basic task of management is motivating employees to actively contribute to the implementation of business innovations, and business digitalization is one of the biggest innovations. Today, digital business of state and public services in most EU countries is at a satisfactory level, and there is endless space for advancement in the Republic of Croatia. Although public services are based among other things and on the principle of non-mercantilism, the digital transformation in service delivery has two cumulatively related effects. On the one hand there is an increase in economy /rationality, and on the other hand the quality of service whichs raises user satisfaction. Considering that the burden and responsibility for implementation of digital business is on management, this paper describes an appropriate way the content of regulatory functions in the organization and individual cyclical management functions. At the same time, the functions of management in the public health system are emphasized, especially the organization and organizational subjects because success is largely determined by the quality of the organizational structure. Contribution to the cognition of the unconditional implementation of digital transformation describes an active example of digital transformation in the system of the Croatian institute of public health.