For years, we’ve been hearing that the future of productivity is in the cloud. But while visions of real-time collaboration leave technophiles like me starry-eyed, it’s a prospect that means one thing to millions of people: leaving the familiar turf of Microsoft Office 2003 or 2007 so that they can learn their way around yet another application, not to mention some pricey upgrades. But Google wants to let you have it both ways.

Today, Google is launching a new plugin for Microsoft Office called Cloud Connect, which will tie Google Docs directly into the ubiquitous productivity suite, free of charge. Editing a document in Word? It’ll automatically sync to your Google Docs account each time you hit ‘Save’. Want to share a preview of your document without worrying about what file format your coworkers can open? Just send them a link to the Google Docs file. The plugin supports Microsoft Word, PowerPoint, and Excel, and it’s a big deal for Google’s strategy with Docs. The new product is going live for Apps for Business customers today as part of a preview program; everyone else will get it soon. Update: Google says that the demand was so high that it can’t accept any more volunteers, but you can sign up to receive a notification when it’s available.

Now, Microsoft is integrating online collaboration with its newest version of Office, but Google is doing them one better: this will work on Office 2003, 2007, and 2010, and there’s no fiddling with SharePoint required, either. Google also points out that Microsoft’s version doesn’t offer Excel support yet.

The new plugin is a result of Google’s acquisition of DocVerse back in March (note that it only took Google around eight months to get this out the door — obviously a lot of people want it). Installing the plugin should be fairly painless; the download takes around thirty seconds, and the installation process doesn’t take much longer.

Once you’ve installed it, you’ll notice a new ribbon toward the top of the Office UI, which gives you a Google Docs link for the document you’re currently working on, as well as a notification to let you know when it’s been synced with Google’s servers. Documents being edited locally save to your Google Docs account whenever you hit the ‘Save’ button, but unlike the normal Google Docs web editor, changes aren’t saved as you type them. Google Docs product manager Jonathan Rochelle says this is done because of user expectations — Office has always required that you hit the Save button to save (safety recovery versions notwithstanding) so it makes sense to leave it this way.

Multiple people can edit the same document and have their changes synced with each save (hooray for the cloud). But because these changes aren’t reflected in real-time, there’s the potential for conflicts — I could edit a PowerPoint slide to say one thing, and my coworker could put something else on the same slide. Google deals with these conflicts by presenting users with an alert prompting them to choose which version they’d like to save; if they want to go back and switch again later, they can using the document’s version history.

In practice it looks like this should work well, though there will be a bit of a learning curve as people navigate through syncing and version conflict resolution the first few times. And then there’s actually getting them to use the features that Google Docs and the cloud affords. Baby steps.

And that’s really the theme here: baby steps. Google says that it often speaks with businesses who are eager to switch to Google Docs, but who have a significant number of users who still want to stay with Office for whatever reason. This plugin will help clear that hurdle by allowing for organizations with a ‘hybrid’ setup. And in the longer term, Google is hoping that as users get more familiar with Docs, they’ll be more comfortable abandoning the Office client altogether.

There is one significant caveat to the integration with Office, but it’s a bit complicated to describe so bear with me. If you save a document from Powerpoint to Google Docs, and then edit that file using the Google Docs web editor, you will not be able to sync those changes back with the native version of the file. You’ll be able to generate a new PowerPoint file that reflects the changes, but they won’t sync automatically.

This is because Google is still working through fidelity issues, and the conversion from native Office document to Docs web document may introduce some formatting changes that the user didn’t intend to make. Obviously Google hopes to offer this in the future, but we’ll probably be waiting a while for it to overcome document fidelity issues entirely.

You may also recall a company called OffiSync, which we’ve been tracking over the last couple years. OffiSync has offered much of the same functionality that Google is launching for some time — but now that there’s an official solution, it seems like it could hamper OffiSync’s business. Not so, says Rochelle, who explains that OffiSync actually has some additional features compared to Google’s product. He also believes that there’s room for more than one solution to this problem.

Note that this isn’t available for Mac. Google explains that Microsoft doesn’t offer the same public APIs for the Mac version of Office, so there’s nothing it can do.

