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Discussion about agility within Systems Engineering is ongoing [9,10,13] but there had been little discussion about the right context for it. This proposed a classification scheme for the right context of the Agile Development Cycle that was identified to be the main principle of agile development. Prior work about the context of agile software development [5,7, 8] was taken as the basis. Interviews in system developing companies were used to investigate the differences between context of agile software and systems development (hardware systems). It was found that the nature of the system is not only the main difference between the two domains but also the main driver for the right context of the Agile Development Cycle. In contrast to software, hardware systems that have to be produced physically often are difficult to be developed in small cyclic steps. Only if prototyping, testing, and implementing changes can be done quickly and cheaply, this principle is feasible. The system should not be safety-critical as well. Another requirement for feasibility is the willingness of customer to support this kind of development. On the other hand, some factors were identified to drive the demand for agility, like market dynamism, level of innovation, and rate of change. Therefore the context of Agile Systems Engineering was classified into the two dimensions: feasibility and demand. Some company examples were given to describe the different situations in this classification scheme. By using the factors one company can be classified within the scheme. So we find if the Agile Development Cycle can be put into the right context. For a situation where the Cycle is not feasible but agility is needed it we also show how it could be applied partially.