What’s the best way to enable collaborative document editing without creating duplicate file stores?

If the organization already has Microsoft 365 licenses, the most straightforward answer is to formally design and deploy SharePoint rather than letting individual departments create their own environments. SharePoint is intended for shared departmental document libraries and supports Office co-authoring, permissions, version history, retention, and access controls. OneDrive is primarily personal work storage, while SharePoint is the better place for team-owned files.

Treat this as a migration and governance project: inventory the existing data, decide what belongs in each department’s site, remove duplicates and obsolete files, configure permissions, and migrate in stages. Keeping the old servers as an archive or backup may be useful, but maintaining two active sources of truth indefinitely will continue causing problems. If the team has limited SharePoint experience, bringing in an experienced consultant or managed service provider would be worthwhile.

Be careful not to treat cloud file synchronization as simultaneous editing. Office documents such as Word, Excel, and PowerPoint can support co-authoring when stored in SharePoint or OneDrive and opened with compatible Office applications. Other file types may simply create conflicts or recovery copies when two people edit them at once.

For files that cannot safely support co-authoring, use check-out/check-in, versioning, or another document-management workflow to prevent simultaneous changes. The correct solution depends on the application that creates each file, not just on where the file is stored.

First regain control of the current environment. Review which users and departments have enabled OneDrive, identify where files have been created or changed, and establish which copy is authoritative before migrating anything. Then use the management tools available to you, such as Group Policy, Intune, and Microsoft 365 administrative settings, to disable or restrict unwanted folder backup and personal-storage behavior.

A sensible structure would be separate SharePoint sites or libraries for departments, role-based access, version history, retention policies, MFA, and conditional-access rules. The on-premises servers can remain a controlled archive or backup target if required, but users should have one clearly defined production repository. Document the rules and communicate them clearly so departments do not create parallel systems again.

You can also use Teams for a department-facing experience, since its channel files are stored in SharePoint. That gives users shared documents along with chat and collaboration tools, but the underlying storage and permission structure still needs to be planned in SharePoint.

Avoid casually syncing every SharePoint library to every computer through the OneDrive client. That can create confusing local copies and synchronization conflicts. Keep authoritative documents in SharePoint, limit synchronization where practical, and make sure users understand which locations are approved for work files.