Douglas Mcbride's life had become a blizzard of faxes and e-mails, and the owner of Alaska Indoor Sports Distributing Ltd., a distributor of gaming equipment such as Bingo cards and lottery-style games based in Ketchikan, Alaska, felt as if he was being buried. His suppliers faxed samples of 20 to 30 new products a week. His salespeople, meanwhile, were sending in at least as many daily schedule updates and sales reports, all of which needed reconciling with the company's records. Some days, more than 100 important documents crossed the machine.

Such an onslaught would be a pain for any business owner. Complicating matters for McBride was the fact that his 18 employees are scattered across five locations in the vast state of Alaska. His two warehouses are located some 750 miles apart, in Ketchikan and Anchorage, and each one required a full-time staffer just to send and track faxes. Face-to-face meetings were nearly impossible, and even getting a colleague on the phone was a hassle.

McBride's business was growing, but the communications woes were taking a toll. Faxes and e-mails were getting lost, and new orders were no longer being processed efficiently. There had to be a technological fix for the problem, he figured. But the products he found -- including Microsoft Exchange, the software giant's heavy-duty corporate server, and wide-area virtual networks -- were either too pricey or too difficult for his nontechnical staffers to use. He was on the verge of giving up hope when he stumbled onto Groove, one of a new breed of relatively cheap, easy-to-install collaboration tools.

He downloaded a free trial version one Saturday. Within a couple of hours, he had what Groove calls a virtual "workspace," in which he could post documents, spreadsheets, and images, solicit employees' comments, and make notes and changes. The software tracked the various changes automatically. Suddenly, a mundane task like the daily sales report, which had long meant gathering faxes from four field sales staffers and three phone salespeople and pulling together the seven reports into one, could be done with a simple spreadsheet housed in Groove -- which sent McBride an instant message notification every time the numbers were updated. McBride was sold. He spent $600 for a 10-user license. "Now, we communicate like we're in the same office building," he says.

Groove is one of a powerful new generation of software tools designed to help businesses collaborate. Computers, of course, have long helped people work together. But previous versions of collaboration software have tended to assume that all users were in a single location and generally required all the information to be stored on a central server. These latest products distribute data across the Web, allowing colleagues thousands of miles apart to work together on projects as if they were in the same room. Such tools have the intuitiveness of e-mail but add new features, like instant messaging and voice over Internet capabilities, as well as better ways to organize messages, documents, and calendars, says Kevin Werbach, founder of tech trends watcher Supernova Group.

Alternatives to Groove include Microsoft's SharePoint Services, a Web-based document and communications manager that is easy to use and works with PCs that run Apple or Linux software. IBM offers Lotus Team Workplace (formerly QuickPlace), which is similar to SharePoint but works with Lotus products like Notes and the Sametime instant-messaging tool. Finally, there are open-source software tools known as wikis, which combine e-mail-like message posting with the ability to track documents. Most of this Linux-based software can be downloaded for free, although some vendors offer their own systems.

Such software has made all the difference for Alaska Indoor Sports. When suppliers send new product updates, for example, they're automatically popped into a workspace in Groove, and notices go out to the salespeople. The same goes for inventory updates. The daily sales update no longer vexes. McBride even wants to set up workspaces in Groove for his suppliers, so they'll post information there rather than sending e-mail or faxes. Groove has allowed McBride to lay off one of his fax checkers; the other now spends her time in sales support. Communications costs are down by more than 70% (faxes between Anchorage and Ketchikan run 14 cents a minute) -- and the newfound productivity helped push sales up some 25%, McBride says.

AlgoRx Pharmaceuticals, a Cranbury, N.J., developer of pain management medicine, started using the software in early 2002 to help manage clinical studies and trials, some of which take place in Eastern Europe. Groove lets the company put together internal people and outside consultants to shape the proper protocol for the study and cuts in half the need for face-to-face meetings. In the past, images from patient studies were faxed to every member of a team, perhaps 12 people in all. Each of them, in turn, would comment via e-mail, which engendered several more rounds of electronic messaging. "Before you know it, you've got a dozen e-mails and your head is spinning," says Jeffrey D. Lazar, AlgoRx's senior vice president of clinical research and regulatory affairs. Now the documents are uploaded into Groove, an e-mail alert is sent out asking for comment, and all the comments appear alongside the appropriate image in Groove. Colleagues can even gather in the virtual workspace to discuss the matter in real time. Lazar estimates Groove has saved hundreds of thousands of dollars in travel and telecom costs.

In Lenox, Iowa, Barker Implement and Motor Co., a five-site John Deere dealer, uses Microsoft's SharePoint as a sort of electronic water cooler, where salespeople post their latest quotes on equipment. That's helped cut down on what had been a persistent problem: customers using a quote from one Barker dealership to undercut another. "We have five locations, so it's important that we get the message out to each employee at the same time," says owner Todd Barker. "These guys need to know that customer A has been to store A and already gotten a price, so we don't get into an internal price war."

For all its advantages, collaborative software is not perfect. The programs don't have very good search capabilities or ways to track content. That might not matter in the first year or so of using it. But digging up three-year-old marketing projections could be a hassle. Vendors say they're working on adding these features.

Wikis, meanwhile, are an emerging type of software particularly popular among tech firms. Andy Stack, senior director of finance and operations at Stata Laboratories in San Mateo, Calif., which makes the Bloomba e-mail program, likens the software to "a big virtual whiteboard" that allows the company to coordinate development and operations among employees and contractors in California, India, and elsewhere. Being open source, wikis are free but can require some technical expertise to set up and administer. So Stata uses Workspace, wiki software made by Socialtext, based in Palo Alto, Calif. For about $5,000 for one year, the company gets a virtual workspace for each project, organizational tools, and sophisticated e-mail capabilities, but it does not have to maintain the software itself. Because all departments use the application, customer service reps can see relevant goings on in marketing that might cause a spike in calls and plan accordingly, Stack says. The payoff: "We're a fast-moving company and collaborating through a wiki helps reduce our start-up time with contractors and consultants. We think it gives us an edge over slower competition."

Sidebar: Getting Closer

Software options for small companies

$345 for five users; $69-149 per additional user
Built-in voice over Internet protocol; enhanced security features; Web-conferencing

Microsoft SharePoint
Free, with $599 Small Business Server or $999 Windows Server
Manages websites, documents, lists, calendars; integrates with Microsoft Office applications

Socialtext Workspace
$995 for five users; $30 for each additional user
Linux-based but more user-friendly than most Linux applications; includes range of administrative tools, including security