The Italian army during WWII was completely unready for a war against modern European armies. The Individual Italian soldier was for the most part brave and willing to fight, but they were ineptly led, poorly supplied, and inadequately armed.

Fascist Italy never had the full support of the people when they went to war, what little Jingoism they had quickly dissipated when the British appeared of the coast of Italy and destroyed two Italian battleships. Mussolini had envisioned a "separate war" from Germany, but that quickly became impossible as Italy went from defeat to defeat.

Mussolini, in order to enlarge the size of his army, instituted "Binary" infantry divisions. This means that each division only had two brigades of infantry as opposed to the three or four of other nations. So right of the bat the average Italian infantry division is going to be weaker than its counterparts. This came into play in Greece and France when stronger Greek and French infantry divisions were able to easily repel more numerous Italian infantry divisions.

Italy while it had a comparatively modern air force and somewhat modern navy, had almost completely neglected armoured development. Mussolini was deeply distrustful of foreign companies and gave Italian companies like FIAT a monoply on vehicle production. This meant that the tanks Italy did produce were often inefficient and inferior to the tanks fielded by Germany, the USA, and Britain. Even the elite Italian armoured divisions like the 132nd Armoured division (nicknamed Ariete) couldn't stand up to the tank divisions of Britain. In North Africa Rommel did not trust the Italian armoured divisions for exactly this reason. While the division did fight admirably at points, its lack of decent tanks caught up to it and it was eventually destroyed at the Battle of El Alamein.

Italy also had issues with mechanized transport. They had next to no mechanization. When Italy invaded British Egypt, they did so in long fighting columns that really belonged more to the 19th century than to the 20th. This lack of motorized transport would come to haunt them in Operation Compass. When a British motorized unit outflanked the retreating Italians and cut them off, taking over 100,000 prisoners. This lack of motorized transport also meant that the Italians could partake in the rapid offensive movements that their German allies did. This led to them being relegated to cannon fodder since they could not be used to achieve breakthroughs, like the German Panzer and Motorized units could.

The Italian commanders were also often hamstrung by Mussolini who demanded they launch costly offensives that had little chance of success. Like in France and Greece when Mussolini demanded that his generals launch offensives into heavily defended, mountainous terrain. The Italian commander in Libya, Rodolfo Graziani, did not want to invade Egypt because he knew his army was not ready, but Mussolini forced him to.

Finally, the Italian Army was just not ready for war. Mussolini had been told that his army wouldn't be ready until at least 1943, but when the French began to collapse rapidly and Britain looked poised to do the same, he declared war expecting a short war. The Italians had no motorized divisions to speak of, the rest of their army was being modernized , and they just did not, as a country, have the ability to sustain a modern European war.

Sources:

Hitler's Italian Allies by Macgegor Knox

The Fall of Mussolini by Phillip Morgan

Mussolini by Dennis Mack Smith