I've summarised some of the main issues before- tl;dr a massive infantry army with patchy training at best, led by a very weak command structure and officer corps with insufficient industry and technology relative to their needs.

Italy's automotive industry and economy was stunted at the start of the war, relying on significant imports, meaning it was difficult to mechanize in the face of increasingly armoured warfare, whilst Mussolini's call for '8 Million Bayonets' put too much stress on the army's ability to supply and train its men. Most of the armour began the war obsolete with little industrial capacity to innovate, whilst most of the artillery was from WW1. The High Command was also woefully inadequate in both size and skill, causing a lack of organization at the operational level, compounded by severe failings at the tactical level in North Africa and elsewhere (building stone forts which could be easy isolated or bypassed altogether). The Greeks were able to conduct a strong defensive campaign in difficult mountainous terrain which negated the numerical advantage of the unsupported Italian infantry- 600,000 had been inexplicably demobilized just weeks before the invasion.

So basically Italy had a large army of lightly-equipped and trained infantry which it could not hope to command and supply effectively. I believe Rommel was quite complimentary of the Italian soldier under proper command, and the 8th Army seems to have served adequately on the Eastern Front, but blunders from the top caused a lot of issues.

/u/Rosstafarii gave an adequate answer, but I'll expand on it a little bit and offer you a book recommendation.

Mussolini and his Generals by John Gooch goes into this subject in exhaustive detail, and although I can't recommend it for casual reading it's definitely insightful if you have a real interest in the subject of Italy's performance in World War Two.

In essence, the Italian position was untenable and complicated by several major factors. Among these was doctrinal confusion - in the airforce in particular - and unclear strategic goals. Over the course of the late 1930's Italy switched from wanting to establish its own hegemonic bloc in the Balkans, to supporting France, to competing with France, to supporting Germany, to blocking German expansion - and often time it occupied several of these contradictory positions at the same time. The Italian political leadership was confused about what it's long-term strategic goals were, and had difficulty seeing things through to the end. Mussolini's adventurism in Ethiopia, the Balkans, and elsewhere didn't make things easier on the military either, and they were often called to re-orient armies and priorities on a dime.

But perhaps the most salient point was the strategic vulnerability of Italy's position, which both made it impossible to compete as a great power but also made them feel insecure and in need of expansion. In essence, Italy was an exposed peninsula almost entirely dependent on imports war making materials, vulnerable blockade, with a navy weaker than any of their two likely rivals yet without the natural resources or raw materials to build a larger navy.

Italy's industry size was not the problem - they didn't have the resources to support the industry they did have. Mussolini's territorial ambitions in Africa and elsewhere make a little more sense when viewed from the standpoint of a nation that believed it should be a great power and urgently needed the resources required to build and maintain that status.

But in any case, Italy's strategic vulnerability and the needs imposed upon its modest military were too much to bear. Furthermore, the Italian strategic leadership and its decision making capacity were deeply flawed - John Gooch's book has entire chapters devoted to some of the meetings that went on, where Mussolini would lecture for hours about this and that needing to be done, and then a year later they'd have another meeting and find no real progress had been made.