Information Technologies (IT) have been described as offering tremendous opportunity to improve health services as well as in meeting broader developmental goals which have an impact on health. Through the use of IT, healthcare sectors can potentially plan, monitor and evaluate health services as well as communicate more effectively within and across organizational hierarchies. However, a number of studies suggest several hindrances where the use of IT to bring critical change in the health sector of Tanzania has been problematic. Despite the lack of appropriate use of the existing IT resources in the health sector, donors and government have continued helping the health sector to acquire up-to-date IT resources while however placing little emphasis on long term IT training, data management and effective utilization of information resulting into wasted of such resources hence little improvement in health services delivery. This study is based on the Health Information System Programme (HISP), an action research project aimed at improving health information system in developing countries with the use of IT and information for local action. Under the project, the district health information software which is customizable, open source and freely distributed has been implemented in five pilot districts in Tanzania. The lessons learned from HISP project and other levels of the health sector in general indicate the lack of skills for data interpretation and utilisation, policy guidelines on information and human capacity building as well as a lack of flexible system.