The 32-year-old's current deal with Madrid is due to expire at the end of the season and a number of sides are closely monitoring Alonso's situation in the Spanish capital.
Hierro feels Alonso still has a lot to offer, though, and has told Madrid to wrap up talks sooner rather than later in order to keep the Spain international on board.
"Without doubt Alonso should sign a new deal at Madrid," Hierro was quoted as saying by AS.
"He’s a vital player for Real Madrid, because of the role he plays, his experience, his importance, his personality and how he understands the game."
