"Obviously we want to get our season back on track but it is a tough period for us and you have to dig deep," he says candidly.
"I think we did do that on Saturday but obviously we didn't have any width in the squad I had to play and the system we were playing.
"It was a problem but I thought they played very well in the conditions and with what we had available.
"Watford were on a good run themselves and their confidence is high; their clearances were good and when we put them under pressure they didn't lose their heads.
"That won't be the case all the time but you have to give credit to the opposition and I thought they played very well on the day too.
"We have got good quality but the structure and balance of the team has to be right and we are struggling for that balance at the moment - there is no doubt about that."
West Ham is a team, in effect, without a senior recognised right back at the club since the return of loanee Robbie Stockdale and the sale earlier in the season of Sebastien Schemmel, and so Tomas Repka is continuing to deputise.
"We have still got Tomas doing well at right back but it is not his natural position - the shape of the side is obviously not what I want but we are trying to do the best we can with what we have got available at the moment," says Alan.
"I can only speak as I find, and since I have been here I am not sure if he has been booked but, if he has, it has only been the once.
"He is playing out of position but he has not once knocked on my door and moaned about not playing centre half.
"He has just got on with it and been professional - and done well.
"While he is there we are trying to get him to play it better getting forward. "And I can't say there has been one game where he has had a difficult day with the wingers - he has coped with it easily."
Alan is looking for luck and adds:
"The players' application to that has been good and we need a break as well - I think we must be the only team in the league that hasn't had a penalty.
"We are not getting many breaks on the injury front either so let's hope we get a break and the win we all want."
SQUAD: James, Bywater, Lee, Repka, Carrick, Dailly, Connolly, Etherington, Quinn, Horlock, Pearce, Hutchison, Ferdinand, Garcia, Noble, Mullins, Deane, Byrne, McMahon, Sofiane.