Digital enterprise transformations refer to the shifts in digital technologies, market structures, and customer demands that are fundamentally reshaping organizational structures, strategies, cultures, and business models. As a result of the rapid technological changes over the past years, the focus of decision makers has moved increasingly from cost reductions and business-IT alignment to the usage of digital technologies for developing new revenue-generating opportunities. Despite the high relevance of digital technologies in practice, many organizations lack an understanding about the capabilities and the building blocks required for successful digital enterprise transformations. This thesis identifies digital innovation management and IT project portfolio management as the two key building blocks for effective digital enterprise transformation capabilities. The objective of this thesis is to develop a comprehensive understanding of the capabilities required to perform successful digital enterprise transformations. In the introduction paper, the goal of this thesis is decomposed into three individual yet interrelated research papers, each addressing specific sub-objectives and research questions. First, this thesis develops a more comprehensive understanding of digital enterprise transformations using an exhaustive literature review on the role of internal and external forces that effect business strategies today. Second, the thesis identifies archetypes of effective digital innovation management using a quantitative study. Third, based on a case study, this thesis identifies issues that impede effective project-based organizations in practice; specifically, the thesis develops design goals and principles for an IT project portfolio management configuration that is aligned and efficient yet agile. Finally, this thesis concludes by discussing the overarching main findings as well as its limitations and future research opportunities. Overall, this thesis deepens our understanding on the microfoundations required for effective digital enterprise transformation capabilities. This thesis contributes to research, since it provides novel theoretical and empirical accounts on a prevailing problem. Decision makers and IT managers may profit from this thesis’s results in that they can provide insights and recommendations into how firms can design innovation management and project portfolio management structures that are attuned to the context of digital enterprise transformations.