For Collaborative work where lot of people edit the document at same time, Wiki format is recommended over MS word. so you can install MediaWiki - the same software the wikipedia uses.
If you are in market for Project management software Read this:
Top 10 Open Source Web-Based Project Management Software
There is Redmine which is my Fav and highly recommended
Lastly, I see you are already using Proprietary MS office Suite. so you can try Microsoft Office Groove 2007 which is made for collaborative purpose and is tighly integrated with other office products like word,excel. so migration would be painless for you


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