Real Madrid exited the Club World Cup with disappointment after defeated by PSG but generally before that defeat, they played well and shown some effects of Xabi Alonso and his tactics. This is good signal for more changes and improvements in Real Madrid when Xabi Alonso has more time to work with his players and they will possibly play better in actual matches of a new season.
What's the difference with PSG, whose elimination was even more painful because they couldn't play effectively against the English team? This doesn't necessarily indicate weakness for a team like Real Madrid, as defeats are inevitable. Xabi Alonso needs to make some rotations, and in crucial matches like the one against PSG, he needs to have options if the attack fails to score.
There's still plenty of time for Xabi Alonso to improve his players, and I believe he will be able to manage this team. Real Madrid is a big team, so it's natural to expect a coach who can deliver success quickly, but it won't be easy for Xabi Alonso.