I admit, I'm a "mail Word files back and forth" sort of guy too, so I know exactly what you are talking about. That's why I was intrigued when a colleague of mine wrote about his experiences with a Web-based document collaboration system called WriteBoard.

Here's what Dennis McDonald had to say:

Jeremiah Owyang and I recently co-authored a "white paper" titled "Business and I.T. Must Work Together to Manage New "Web 2.0" Tools" using the "Writeboard" web based collaborative authoring system.

Jeremiah is in California and I'm in Virginia. I've published the paper on my blog; Jeremiah will be posting a duplicate on his. (My link to the paper is here: Business and I.T. Must Work Together to Manage New "Web 2.0" Tools).

This was my first time using a collaborative tool like Writeboard. All you have to do is create a free account, post the initial text, create a password controlled group, then people in different locations can edit and compare versions of the text using a standard web browser over the Internet.

The WriteBoard system keeps track of individual versions by creating a separate addressable file whenever you click the "save" button. Text is displayed on the left side of the screen and a list of the dated and numbered versions (Jeremiah got up to 47 -- we clicked the "save" button a lot!) is kept on the right side of the screen. If you select
two versions the system will compare the two and display differences with color highlighting.

The interface is not entirely WYSIWYG. Display formatting is toggled back and forth between plain text and and a semi-wisywig display with bold and italic display. For our purposes, though, that worked just fine as we could concentrate almost totally on content.

The system makes it easy to export and email any version of the document in plain text or HTML. I cannot say how good the security of the system is or whether one would want to use this for collaborative authoring of a document that contained confidential information.

Writeboard is not a bad service. It works well with two people working on a document. I can't say how well it would work with more people involved or with a document that required a more complex character set or the inclusion of multiple images.

There are a number of other solutions available too, but this might be a good place for you and your colleague to start. Thanks, Dennis, for letting me share this with everyone!