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X12 Blog

Importance of Consensus Building

Consensus building: X12's cornerstone for standards development
By Cathy Sheppard, Executive Director, X12

"The U.S. technology sector has long supported an industry-led, voluntary, consensus-based model of standards development because it works ─ and in the world of standards, the first move is not the last."

Excerpt from Josh Kallmer, Executive Vice President, Information Technology Industry Council, Washington, D.C., U.S., in a July 29, 2019 letter to The Financial Times1     

With an incalculable investment of time and resources from vast numbers of businesses and organizations, it's true the world of developing standards to shape new interoperable technologies is a highly structured process. This proven process, albeit time-intensive, involves a great variability of mechanisms for creating, vetting and approving standards supporting a continuous, evolving roadmap.

At the center of rigorous standards development is consensus building, defined2 by The Program on Negotiation at Harvard Law School as a process involving a good-faith effort to meet the interests of all stakeholders and seek a unanimous agreement. A consensus building approach allows groups to reach an overwhelming agreement among relevant stakeholders and maximize possible gains to everyone.

Appropriately, the first tenet of X12's six corporate principles is: Publish high-quality consensus-based standards that are simple, efficient, responsive to the needs of stakeholders and delivered in a timely manner.

X12 is an American National Standards Institute (ANSI)-accredited Standards Developer (ASD) focusing on the development and ongoing publication and use of cross-industry interoperable data interchange standards for more than 40 years. X12 develops and maintains its work for use by implementers and trading partners in different formats that are proven, reliable, efficient and effective to drive business processes globally. With more than 320 transaction standards, 1,400 data elements and in excess of 40,000 codes available for use, the body of X12's work can be used to conduct nearly every facet of business-to-business operations.

In fact, billions of transactions based on X12 standards are utilized daily across various industries including finance, government, health care, insurance, supply chain, transportation, and others. Millions of entities around the world have an established infrastructure with a significant investment that supports X12 consensus-developed transactions to streamline and facilitate rich and consistent standardized electronic exchange.

X12's consensus building forum enables its diverse membership of dedicated technologists and business process experts across diverse industries to develop syntax-neutral data exchange standards collaboratively. A lot of different factions of data exchanged in X12 transactions, including well-defined and use-tested standards in production systems, contribute to the building of X12's work.

That said, in a rapidly changing electronic commerce landscape, X12's end goal is for every stakeholder to use the very same standard in convenient formats to solve real-world complex business challenges.

Equal voice in voluntary consensus benefits B2B standards development

At the start of electronic commerce over 40 years ago, the business environment for the buying and selling of products was literally a "free for all." Private trading partners or individual companies would submit invoices and receive payments in substantially different types of formatted documents. The administrative time and cost to manage colossal complexities of billing for every individual business was exorbitant. Gaining consensus on financial transactions was nonexistent as no one entity, third party or trading partner could make an improvement decision that others agreed upon.

In moments of modern history inventiveness, necessity is truly the mother of invention. Realizing business fundamentals of sustainable growth and profitability, stakeholders (vendor competitors and customers) representing various industries came together to bring an equal voice committed to building a consensus-driven collaboration. From this collaboration, the idea was born that the electronic language of business transactions should and would include the same data elements and formats.

Paving the way for ecommerce3 was the development of electronic data interchange. EDI replaced traditional mailing and faxing of documents with a digital transfer of data from one computer to another. Trading partners could transfer orders, invoices and other business transactions using a data format that met the X12 standard, the predominant set of standards in North America.

From batch processing of large amounts of data to the proliferation of Internet access and digital technology innovations, X12 standards have evolved to allow more people to use standards in different ways. But the wealth of four decades of X12's standards development work that incorporates an expansive vocabulary of data elements and constructs must remain for users to unlock value to develop creative, interoperable solutions to complex business challenges.

A voluntary consensus standard4 is defined as a standard arising from a formal, coordinated process in which key participants in a market seek consensus. Use of the resulting standard is voluntary.

For X12, voluntary consensus means that its diverse membership of technologists and business process experts has an equal voice in a non-competitive, safe forum deciding on what those business-to-business transactions should comprise and how they should be formatted. Members can listen to each other's interests, ask questions and gather shared knowledge weighing the pros and cons of implications in the decision-making process of developing or updating a standard.    

Much of X12's work is based on a simple majority, because unanimity is often not achievable. X12's consensus process does not favor large companies over smaller companies, assuring each participating entity has no matter the size is allowed no more than one vote. Above all, X12 members are committed to working together to find solutions that the majority actively supports.       

As technology advances along with X12's ability to support trading partners through different data characteristics in different products, consensus standards, too, must evolve. Consensus standards must embody the needs of all stakeholders to result in a higher quality, purposeful product in tune with emerging interoperable technologies and ecommerce demands. For example, the X12 Unit or Basis for Measurement Codes have changed 600 times over the past 33 years.

The efforts of X12 and many other U.S. voluntary consensus standards organizations are coordinated by the American National Standards Institute (ANSI).5 ANSI sets guidelines for groups to follow in managing the consensus-seeking process in a fair and open manner. ANSI reviews and accredits X12 and other organizations for compliance with these guidelines.   

X12's approach to consensus-based standards development

X12 standards establish a common, uniform language that facilitates business transactions. To remain competitive and profitable in today's interconnected global economy, a seamless electronic exchange of business data among the company, partners (vendors) and customers is critically necessary.

X12 employs a three-prong organizational approach to consensus building between stakeholders:

  1. Open-minded, with vision and insight related to data exchange in both current and developing technologies
  2. Responsive to business requirements presented by other organizations
  3. Collaborates enthusiastically with other SDOs, industry groups, government, and business-focused entities

X12 members meet regularly to develop and maintain high quality data standards to streamline and facilitate consistent electronic interchange of business transactions. X12 standards support transactions such as order placement and processing, shipping and receiving information, invoicing, payment, cash application, administrative health care, and insurance data.

X12's open, transparent and consensus-based environment empowers members to voice comments, recommend changes or updates, and address and vet issues from every point of view. Looking through a technology lens, members take into account the particular business workflows and use cases to create standards supporting e-transactions and enhanced interoperability expanding across industry and company boundaries.

Anyone including the general public can submit a request, an idea or suggestion for revising or developing a new piece of X12 work by completing this form accessible on the X12 website. Early in the process, public input is solicited; and, later in a sequence of coordinated steps, these submissions may become maintenance requests for assignment to X12 groups with related industry and subject matter knowledge and expertise. This streamlined process was developed in order to support a predictable Annual Release Cycle (ARC) schedule for publishing updates to X12 work products, as illustrated below.

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Supporting a consensus building process, X12 members drive all aspects of standardization work, including defining the scope, content definition, and technical content. In simplest terms, the multi-layered maintenance and stakeholder process involves extensive vetting, negotiation, and voluntary input from the public and members. Members also must vote whether to approve revisions; and if approved, the revisions must undergo a technical and quality assurance review prior to publication. X12 publishes new versions of its consensus-driven products annually.


"Change is the only constant in life," said the Greek philosopher Heraclitus. True but as technology has brought exponential growth and rapid change, some constants in business must remain in order to help the future thrive.

Tens of thousands of organizations count on X12 to develop high quality standards upholding business-to-business information exchange. X12 members are confident knowing that X12 transactions are grounded in a consensus-based approach designed to benefit all users and their business needs, today and tomorrow. X12 will continue to moderate an open, transparent and consensus-based environment that empowers members to voice comments, recommend changes or updates, and address and vet issues from every point of view. Having an equal voice is key to achieving fairness in finding a mutually acceptable solution.