Digital transformation refers to major changes occurring in all sectors of the economy and society, as a result of the introduction and integration of digital technologies into every segment of human life. The subject of research work is the contribution of the process of digitization and digital transformation to the improvement of the business processes of companies in Bosnia and Herzegovina. One of the sources of competitive advantage of modern companies is digital technology, which, due to the accelerated development of information and communication technologies, is changing the way of functioning and adapting to a more innovative way of doing business. The problem of research work manifests itself through the question of whether the application of digital technology and digitization affects the business operations of companies and the choice of their business strategy, and whether digital transformation can represent the strategic determination of companies in Bosnia and Herzegovina in modern business conditions. The goal of the research is to investigate the meaning, characteristics, and role and functions of digitization and digital transformation in the business of the company. The paper will present a comparative analysis of the digitization process of business in Bosnia and Herzegovina with the European Union.