Yeah we can't compare Ancelotti to Xabi Alonso, just like you said Ancelotti has been coaching for so long and I think Xabi Alonso was still playing in Liverpool when Ancelotti was already coaching so Ancelotti had gathered more experience than Xabi Alonso, so is not good for us to compare them.
However what I believe is that Xabi Alonso will make real Madrid strong again is just a matter of time.
Ancelotti and Xabi Alonso belong to two different coach generations and Ancelotti is more experienced, has longer career and has already gained a lot of success in his career so far. Xabi Alonso is a young coach but he got success with title and made big impression with Bayer Leverkusen. Comparing players or coaches from two different generations and periods of football is very hard or sometimes impossible.
I only can say that both Ancelotti and Xabi Alonso are good coaches and this means I really believe in success of Xabi Alonso in Real Madrid.
If Real Madrid are not able to change their current performance, then their chances of doing well in the Champions League next season are very low. There is still some time left before the new season starts and during this time the manager may be trying to work on the various shortcomings of the team. Real Madrid are actually doing badly in some areas, but it is clear, last season we saw in La Liga and the Champions League that Real Madrid lost most of their matches only because of their weakness in defense.
Real Madrid must improve their squad with new players who can enhance their weakness, and find possible better tactics, then focus on training sessions and eventually perform as best as possible in a next season. In Champions League, going far like to semi final and final matches is different than winning this title. A club can join several semi finals and even final matches but can not win this trophy.
To become more competitive in Champions League, Real Madrid already did good preparation by bringing Xabi Alonso to their club and appointing him as their head coach. Next things must be improved is their players and then tactics, trainings and more.