Unless you write longhand, you're going to need a word processing software of some sort to write your novel. Most people use Microsoft Word, and I was among them until my computer died, and I no longer had access to an install CD for the Word '97 my sister had installed on my computer. For awhile, I made do with no word processing software, as I wasn't working on any writing project. But as I wanted to get back into writing, I figured it was time to pony up the dough for Word, as it's currently going for $113 at Amazon. Thankfully, I did a little research before making that purchase!
This is where Open Office comes in. I've been using Open Office as my primary office suite for the past year and I find it to work very similarly to Microsoft Office. A lot of the processes are even simpler. I use their spreadsheet software to manage our household's budget, and I use their word processing software to write my novel.
If you're worried that your Open Office document won't be compatible with Word, no worries. One of the many options to save your document is to save it as a .doc file, which is the Word file format. Open Office was created by Sun Microsystems, a well-known name in the industry.
I also recommend using Google's Docs feature as a back-up, or if you want to access your story from another location. I keep a back-up of my story on my Google Docs, that way if I'm feeling inspired and away from my home computer, I can write. I do a daily back-up on mozy.com, but that's not enough for me, as I'm terrified of losing my WIP! I feel better having two back-ups of my novel. Perhaps I've watched the episode of Sex & The City where Carrie's computer crashes one time too many!
PS-No, I was not paid or otherwise compensated for this post! I just love the software.