This paper examines how digital transformation (DT) affects municipal water testing laboratories in the West Rand District, South Africa, a vital public health and environmental sector. The mixed-methods study examines how DT improves laboratory activities, customer service, and quality in resource-limited settings using qualitative observations and quantitative surveys, correlation analysis, ANOVA, and hypothesis testing. The findings show that DT significantly improves operational efficiency, customer satisfaction, and test accuracy. However, resource constraints, skill gaps, and change resistance prevent full adoption. The study offers solutions for overcoming these obstacles and implementing DT in municipal labs. These findings improve public-sector labs' understanding of DT and provide guidance for similar institutions worldwide. To reduce transformation resistance, future research should examine the wider impact of DT across public-sector departments and explore ways to improve employee engagement.