Groove Networks Inc. this week will introduce Groove Virtual Office 3.0, the first version of the company's peer-to-peer collaboration software to offer truly contextual collaboration the way company founder Ray Ozzie envisioned it: The software takes collaboration to users, rather than bring users to the collaboration.

Version 3, by all accounts, brings Groove Virtual Office to full maturity. Most notably, Groove users can share files and folders directly from the Windows Explorer desktop file system, rather than having to copy them into Groove first. They also have more options for setting up alerts that notify them when content in a Groove workspace is changed or simply if another project team member has logged on to a workspace. "The fact that Groove is much more flexible in the way people choose to interact with it will make it much more usable," says Peter O'Kelly, an analyst with research firm Burton Group.

The new version also gives IT departments a set of prebuilt templates to develop collaborative applications that focus on particular business processes, as well as the ability to build custom forms that hook into back-end enterprise-resource-planning and customer-relationship-management systems. A new dashboard makes it possible to manage multiple workspaces, and the management server has been beefed up with auditing capabilities.

But the new features take a back seat to what have been Groove's main attractions all along: synchronization and security. The peer-to-peer architecture, coupled with cryptographic public-key encryption, has made Groove popular with government agencies and security-conscious businesses. "This is the deepest security you're going to find in a commercially available product--period," O'Kelly says.

The U.S. State Department had security in mind when it went live with a pilot deployment of Groove's previous version in May. It's been using the software to manage the formation of the U.S. Embassy in Iraq that opened June 28 when the transition of power took place. The State Department had to take over thousands of contracts formerly managed by the Defense Department, hundreds of people had to be accounted for as they entered and left the temporary facility, and the department had to coordinate with three other federal agencies--the Defense Department, the Agency for International Development, and the Office of Management and Budget--as well as with the Coalition Provisional Authority, which served as the de facto Iraqi government before the transition.

"We had a requirement that we needed to move a lot of data securely, and there weren't any products [other] that did what we needed to do," says Glen Johnson, director of the State Department's Iraq transition-management staff.

The department has been impressed enough with Groove that it's considering broader use of the software. Even though Johnson says the department has used only a small portion of Groove's capabilities, he's seriously considering the new version, which promises significant performance improvements that would speed up downloading 250 Mbytes of documents from workspaces to every workstation in the embassy.