For my German usability blog, I interviewed Marcel Becker, Technical Manager International Portal & Products at AOL LLC, on the challenges of Internationalization ("I18N") and Localization ("L10N") of centrally built products. Marcel says,
Building internationalized products basically requires the development teams to make the products localizable. This means they can easily be translated in the respective target language (and use the appropriate char set etc). …
I18N and L10N are more like principles and attitudes which define how you actually develop a product. It is absolutely important that developers will follow established guidelines and are using standards to develop software. Sticking with legacy or non-standard approaches will not just mean additional work for maintaining applications, but maybe also creating additional interfaces when standard systems or applications are used to access non-standard systems.
Read the full interview in Marcel's I18N blog. (Or read the original German interview.)