The alliance between Italy Germany and Austria was a defensive one so Austria declaring war on Serbia didn't trigger the alliance, also Italy and Austria were historical enemies so their alliance wasn't so strong. When Italy joined GB France and Russia they promised them the Austrian territories Italy wanted, the so called London pact (not sure of it's the right translation), while Austria didn't want to give Italy the territories it wanted for their help, like Germany advised to do, so Italy joined the firsts, also they thought it would be a quick war so Italy didn't ask for financial help and war aids from the new allies, in hindsight it was quite stupid. In reality the majority of the people didn't want to enter the war, like the Parliament, but when Giolitti, the soon-to-be Prime Minister and supporter of neutrality, was informed that secretly the King already signed the London pact and that a refusal to enter the war would have forced the King to abdicate he decided to bring Italy in the fray in the name of taking Trento and Trieste, cities inhabited by italian-cultured people but in Austrian territory. The most stupid part is that during the peace talk Wilson refused to recognise the pact because it was against his 14 principles so the allies told Italy to choose between the territories promised in the pact or the ones inhabited by italian-cultured people, and what did Italy ask? They asked for both and in the end got neither.