Last season's Double winners were beaten in the third round of the Carling Cup, fourth round of the FA Cup, quarter-finals of the Champions League and are third in the league, unlikely to catch leaders Manchester United with six games to go.
Not even the consolation of a second-place finish looks enough to keep the Chelsea boss in a job next season.
Big losses: Chelsea have been robbed of the services of heavyweight duo Lampard (left) and Drogba (right) due to injury at crucial stages of the season
Ancelotti said: 'Second place is better than third but it's not very important. At the start of the season your dream is to win, not to finish second.
'I don't think the squad was good enough this year. At the start of the season, we couldn't have envisaged having very important players out at the same time. We struggled to manage this.
'Without Frank Lampard, Didier Drogba, Michael Essien, John Terry and Alex it was very difficult. At one point, we needed to put Paulo Ferreira in at centre back because we had lost all our other centre backs.
Hamstrung: Ramires (left) and Alex will miss Chelsea's clash with Birmingham
'Without Lampard and Drogba in the difficult moment, it was not easy to move on without these kind of players, not just their technical qualities but their personality and character. We missed them in November and December when we didn't play well.'
Despite the concerns, Ancelotti doesn't envisage wholesale changes this summer.
He said: 'I don't think there will be a lot of changes during the summer because we bought very important players in January, David Luiz and (Fernando) Torres. I don't think we need to have too many more changes.'
Many of Chelsea's players are now in their thirties but Ancelotti claimed this did not mean they were on the way down.
'After 30 years old, you can use your experience to maintain yourself at the top level,' he said. 'I think that football is not just physical, it's not just technical. It's experience, ability to manage yourself, to be professional.
'When you increase your age, your professionalism improves every time- if you are intelligent. I think that this club has very intelligent players.'
Players that are not so easily replaced, according to Ancelotti, who added: 'Every player has particular skills and abilities, which are difficult to replace.'
On the subject of exposed squads, fitness coach Chris Jones played for the reserves in a 4-1 defeat by Manchester United on Monday and academy goalkeeping coach Mark Beeney was on the bench because the club were saving some of their young players for the FA Youth Cup semi-final second leg at Old Trafford.
Chelsea started the season with a squad of 19 senior players but reinforcements arrived in January in the shape of Fernando Torres and David Luiz and Ancelotti claims the squad does not need extensive surgery in the summer, despite suggestions that it may be the end of theroad for some of the old guard.
Drogba, 33, has one year on his contract and has failed to strike an understanding with ?50million Torres. But Ancelotti said: 'I don't think there will be a lot of changes because we bought very important players. Drogba doesn't have a problem to continue playing for this team in the next seasons. I am happy to train Drogba, to train Torres. It is better to have Drogba and Torres with you than against you.'
Chelsea are without Alex and Ramires for the game against Birmingham at Stamford Bridge. The Brazilian pair have hamstring injuries, which will also rule them out against West Ham on Saturday.
P.S. Birmingham are probably not the club Fernando Torres would want to face ashe tries to break his Chelsea goal duck, when he is likely to start on the bench.
The Spain striker, signed from Liverpool for ?50million in January, has not scored in his three Premier League games against the Blues or won a game either. And it's 701minutes for Chelsea and counting, Fernando.
P.P.S. If Torres thinks he has a scoring problem then he should consider himselffortunate he is not in the same position as Cameron Jerome. The Birmingham striker last scored in the League in November, against Stoke, a run of 19 games.
At least Jerome has found the net since, however, against Millwall and Bolton in the FA Cup.
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Explore more:People: John Terry, Michael Essien, Didier Drogba, Fernando Torres, Frank Lampard, Carlo Ancelotti Places: Birmingham, Liverpool, Spain