diff --git a/inventory/group_vars/physical_hosts.yml b/inventory/group_vars/physical_hosts.yml
new file mode 100644
index 0000000000..223660b5e9
--- /dev/null
+++ b/inventory/group_vars/physical_hosts.yml
@@ -0,0 +1,2 @@
+---
+is_metal: True
diff --git a/inventory/inventory.ini b/inventory/inventory.ini
new file mode 100644
index 0000000000..8c26d8f345
--- /dev/null
+++ b/inventory/inventory.ini
@@ -0,0 +1,199 @@
+## This inventory contains a base structure,
+## a reference for deployers, allowing them
+## to extend how they like it.
+
+# hosts is an ansible reserved term.
+# We should move away from it, but in between
+# we keep this for compatibility reasons.
+[physical_hosts:children]
+hosts
+[hosts]
+
+## Mandatory groups for the setup-infra playbooks
+[etcd_all]
+
+[galera_all]
+
+[haproxy]
+
+[memcached]
+
+[rabbitmq_all]
+
+[repo_all]
+
+[rsyslog]
+
+[unbound]
+
+[utility_all]
+
+## Mandatory groups for the setup-openstack playbooks
+[aodh_all:children]
+aodh_alarm_evaluator
+aodh_alarm_notifier
+aodh_api
+aodh_listener
+
+[aodh_alarm_evaluator]
+[aodh_alarm_notifier]
+[aodh_api]
+[aodh_listener]
+
+[barbican_all]
+
+[ceilometer_all:children]
+ceilometer_agent_central
+ceilometer_agent_compute
+ceilometer_agent_notification
+ceilometer_alarm_evaluator
+ceilometer_alarm_notifier
+ceilometer_api
+ceilometer_collector
+
+[ceilometer_agent_central]
+[ceilometer_agent_compute]
+[ceilometer_agent_notification]
+[ceilometer_alarm_evaluator]
+[ceilometer_alarm_notifier]
+[ceilometer_api]
+[ceilometer_collector]
+
+[ceph_all:children]
+ceph-mon
+ceph-osd
+ceph-rgw
+
+[ceph-mon]
+[ceph-osd]
+[ceph-rgw]
+
+[cinder_all:children]
+cinder_api
+cinder_backup
+cinder_scheduler
+cinder_volume
+[cinder_api]
+[cinder_backup]
+[cinder_scheduler]
+[cinder_volume]
+#[cinder_volumes_container]
+
+[designate_all]
+
+[elasticsearch]
+
+[glance_all:children]
+glance_api
+glance_registry
+[glance_api]
+[glance_registry]
+
+[gnocchi_all:children]
+gnocchi_api
+gnocchi_metricd
+[gnocchi_api]
+[gnocchi_metricd]
+
+[heat_all:children]
+heat_api
+heat_api_cfn
+heat_api_cloudwatch
+heat_engine
+[heat_api]
+[heat_api_cfn]
+[heat_api_cloudwatch]
+[heat_engine]
+
+[horizon_all]
+
+[ironic_all:children]
+ironic_api
+ironic_compute
+ironic_conductor
+ironic_server
+[ironic_api]
+[ironic_compute]
+[ironic_conductor]
+[ironic_server]
+
+[keystone_all]
+
+[kibana]
+
+[logstash]
+
+[magnum_all]
+
+[molteniron_all]
+
+[neutron_all:children]
+neutron_agent
+neutron_bgp_dragent
+neutron_dhcp_agent
+neutron_l3_agent
+neutron_lbaas_agent
+neutron_linuxbridge_agent
+neutron_metadata_agent
+neutron_metering_agent
+neutron_openvswitch_agent
+neutron_server
+neutron_sriov_nic_agent
+[neutron_agent]
+[neutron_bgp_dragent]
+[neutron_dhcp_agent]
+[neutron_l3_agent]
+[neutron_lbaas_agent]
+[neutron_linuxbridge_agent]
+[neutron_metadata_agent]
+[neutron_metering_agent]
+[neutron_openvswitch_agent]
+[neutron_server]
+[neutron_sriov_nic_agent]
+
+[nova_all:children]
+nova_api_metadata
+nova_api_placement
+nova_api_os_compute
+nova_cert
+nova_compute
+nova_conductor
+nova_console
+nova_scheduler
+[nova_api_metadata]
+[nova_api_placement]
+[nova_api_os_compute]
+[nova_cert]
+[nova_compute]
+[nova_conductor]
+[nova_console]
+[nova_scheduler]
+
+[octavia_all]
+
+[rsyslog_all]
+
+[sahara_all:children]
+sahara_api
+sahara_engine
+[sahara_api]
+[sahara_engine]
+
+[swift_all:children]
+swift_acc
+swift_cont
+swift_obj
+swift_proxy
+swift_remote
+[swift_acc]
+[swift_cont]
+[swift_obj]
+[swift_proxy]
+[swift_remote]
+
+[swift_remote_all]
+
+[tacker_all]
+
+[trove_all]
+
diff --git a/scripts/openstack-ansible.rc b/scripts/openstack-ansible.rc
index f9e60fc909..3324c8148e 100644
--- a/scripts/openstack-ansible.rc
+++ b/scripts/openstack-ansible.rc
@@ -14,7 +14,7 @@
 
 export ANSIBLE_RETRY_FILES_ENABLED="${ANSIBLE_RETRY_FILES_ENABLED:-False}"
 
-export ANSIBLE_INVENTORY="${ANSIBLE_INVENTORY:-OSA_INVENTORY_PATH/dynamic_inventory.py,/etc/openstack_deploy/inventory.ini}"
+export ANSIBLE_INVENTORY="${ANSIBLE_INVENTORY:-OSA_INVENTORY_PATH/dynamic_inventory.py,OSA_INVENTORY_PATH/inventory.ini,/etc/openstack_deploy/inventory.ini}"
 
 export ANSIBLE_LOG_PATH="${ANSIBLE_LOG_PATH:-/openstack/log/ansible-logging/ansible.log}"
 mkdir -p "$(dirname ${ANSIBLE_LOG_PATH})" || unset ANSIBLE_LOG_PATH
@@ -53,9 +53,3 @@ export ANSIBLE_STRATEGY_PLUGINS="${ANSIBLE_STRATEGY_PLUGINS:-/etc/ansible/roles/
 export ANSIBLE_CONNECTION_PLUGINS="${ANSIBLE_CONNECTION_PLUGINS:-/etc/ansible/roles/plugins/connection}"
 
 export ANSIBLE_FORCE_HANDLERS="${ANSIBLE_FORCE_HANDLERS:-True}"
-# Extra non-ansible default variables to use with vars_plugin.
-# Allow the usage of userspace group_vars host_vars with user
-# defined precedence until this behavior is merged in the
-# inventory
-export GROUP_VARS_PATH="${GROUP_VARS_PATH:-OSA_GROUP_VARS_DIR:/etc/openstack_deploy/group_vars/}"
-export HOST_VARS_PATH="${HOST_VARS_PATH:-OSA_HOST_VARS_DIR:/etc/openstack_deploy/host_vars/}"