It was plagued by a number of very serious shortcomings:
inferior materiel, with some exceptions (some planes were good and the navy was generally decent), armor in particular
inferior leadership, because of complete lack of coordination between commands and branches operations were cumbersome
inferior organization, divisions were made up of two brigades and lacked support units
inferior industrial output, since Italy had not had time to fully industrialize at this point and was hard hit by League of Nations sanctions in the wake of the second Ethiopian war
Some units, mainly the Folgore paratroopers, the Alpini mountain divisions and the elite demolition squads of the X MAS were well trained and tenacious fighters. The X MAS was equipped with manned torpedoes and very effective in awesomely daring raids. But it couldn't be much more than isolated successes.
We just didn't have enough production capability to sustain a war like WWII. To give you an example, FIAT designed an excellent fighter plane, the G.55, considered superior to anything the Germans had in 1943 by the Germans themselves. It only managed to manufacture 164 of them.
The strategic situation was very bad, too. The Regio Esercito was very ineffective in Northern Africa, constantly outmanouvered by the British. Even worse, Mussolini decided to invade Greece and failed miserably until the Germans came to the rescue. After that, Italian units participated in the invasion of Jugoslavia. 30 divisions were mired up in the occupation of the Balkans from 1941 to 1943. Repression of the Tito resistance was very bloody and difficult, and ultimately led to the heavy defeat of the Neretva river in the first half of 1943. Units of the RE were sent to Russia starting from July 1941 to support the German invasion. The expedition culminated in a complete rout during the Little Saturn Soviet offensive in Stalingrad. Three Army corps were obliterated with almost 120,000 casualties.
No it wasn't.
The Italians suffered from 4 major problems, that basically crippled their contribution to the war effort.
The First major problem was that the different branches absolutely hated each other with a passion to the point that many good ideas were rejected on the grounds that it would mean one of them would have to lose budget. the most famous case is the 1927 discussion on the procuring of an aircraft carrier. in short, the Navy and the airforce fought a lengthy administrative battle over who was to command the aircraft stationed on top of the carrier. The Carrier in question did not materialize.
Failure to develop a war industry on time. In short, the Italians had started to plan for a large was from the mid 20's onwards. However, the Italian industry was rather limited. This led to a situation where the army, navy and Airforce kept ordering new equipment that never got delivered. For instance, in mid 1942, the Airforce ordered a series of 200 improved 202's, called the 205, Veltro. at the time, Macchi was still producing the 202 as well as filling its last of the earlier 200, a plane that was designed in 1936. This combined with a shortage of materials and poor planning and dispersion of factories meant that the Armed forces were constantly short on important items, especially the advanced stuff like tanks and aircraft. Compare the italian aircraft production which is tiny in comparison with Germany or Japan. Furthermore it wasn't helped by that Ansaldo Breda, Italy's only tank producer was more interested in making money then in making tanks, which led to the point where corporate interests prevented the italian army to buy/produce the Panzer III and V.
Training. Although the Italians had quite a few crack units, (Bersaglieri, Alpini, and the Flotilla decima), the majority of Italian divisions were made up of fit, but poorly led troops that lacked the firepower to effectively counter the Western allies. this had to do with the decision to simply promote officers based on their years, rather then forcing them to be retrained. although this was partially fixed after the debacles of 1940, it kept persisting, that a lot of divisions were poorly led, which impacted their fighting resolve and ability to react to new situations. closely related to this is the fact that the Italian high command was extremely conservative, and preferred to rely more on their tried and tested methods developed in WWI then to embrace mechanization and manouver warfare, although a rapid moving, mobile units were end the end adopted, it wasn't implemented by the time the war broke out, which led to adhoc formations which performed poorly. Again, this was partially rectified, although the lack of industry meant that the amount of motorized and tank divisions never reached the official goals and even then, relied partially on Cavalry in lieu of motorized infantry. Possibly the most interesting development in Africa in light of this was the decision to motorized all artillery brigades, and divisional guns.
Failure to plan. Unlike the Germans, the majority of Italian offensives were adhoc, ideas, concieved over several days, and executed before any serious gathering of troops and equipment could be done. Best example is the Failure to invade Greece, a plan that was drawn up in the space of 2 weeks, and initially conducted by a single, not up to strength division (that happened to run into a well fortified Greek division that was at full wartime strength). Although it was later remedied when the general in charge was switched out, the new General took a more cautious approach and spend considerable time bringing in troops, artillery and supplies before making another attack in conjuction with the German army corps that attacked further East along the Greek border.
So, did the Italians get anything right you might ask. Well, for all its flaws, the Italians had some redeeming moments. First up, the Italians in WWII are the undisputed Frogmen masters, perfecting the technique and successfully employing it to even the odds against the Royal navy by grounding 2 battleships in Alexandria using limpet mines. Running an motorboat filled with explosives into the HMS york, and sinking approx 40-50.000 tonnes on British shipping by mine and torpedo. (and later on, sinking the Cruiser Goriza that was captured by the Germans in Port). The second success they had was in countering the British codebreakers in Bletchley park. The Regia Marina, for instance, could read most of the British royal navy ciphers, and frequently rescheduled or redirected various convoy's bound for North Africa. Unlike the Germans, the Italian military intelligence service, simply opted to bypass the whole deciphering phase by stealing. as early as 1925, SIM had successfully formed Section P, a special unit tasked with breaking into, and stealing from Embassies. This unit had considerable success as between 1928 and 36 managed to copy 15 codebooks in the British embassy in Rome. When that one was closed, they moved mostly to the US embassy along with the UK ones in Spain and Portugal. This group is also responsible for the stealing of the US state department's black code, which was used by their man in Cairo to report sensitive information to the US state department.
Apart from this, there is a collection of suicidal cavalry charges that managed to hit home, 1 near Hollywood action movie character that famously evaded British authorities in Italian East Africa.
The Italian army really wasn't effective at all.
In the first half of the 20th century Italy was on the tail end of what would be considered a "great power." In fact there were a lot of debates as to whether they really should be considered a first rate power at all. They had a smaller population than the UK, France, or Germany. Still they were larger than any of the lesser powers. They were also the least industrialized of the powers. So depending on what measure you use for industrialization, they tend to statistically look a lot more like Belgium than say France. That put them at a significant disadvantage in developing an armaments industry. They simply couldn't crank out new designs quickly or in quantity.
To compound this, Mussolini started a rearmament program when he got into power in the 1920s. Most other powers rearmed in part in response to that. Most of the Italian equipment was thus 10 years older than their opponents' equipment. So when Italian tanks ran across the British Matilda in Libya, they found that they couldn't hurt the Matilda, while the Matilda could most definitely hurt them. Even the brand new M11/39 was hopelessly outclassed, and the Italians only ever built 100 of them, compared to the 2,987 Matildas the Brits built.
This kind of disparity was seen across just about every weapon class. Even when the Italians built good equipment they tended to be built in very small quantities. A good example of this is the Reggiane Re.2005 fighter plane. It was a seriously great airplane, easily the match of anything the allies were producing in 1942-43. But they only managed to produce 48 of the things. Compared to the 20,351 Spitfires the British produced, the Re.2005 didn't have much chance to make a real impact in the war.
Now an equipment disparity could be overcome had the Italians been superbly led and trained. But the Italians didn't have much of a tradition of professional leadership development. At a high level commanders were selected for political reasons rather than an ability to cammand or lead. Who you knew or were related to mattered a whole lot more than how well you performed in academy or on the field. And at the very top Mussolini lacked much in the way of a coherent vision. For example the invasion of Greece was planned out and troops moved into position. Where they then sat for a long time announcing to Greece what was happening. Half of the Italians were then recalled. And then Mussolini ordered an attack. Instead of 20 divisions attacking a surprised Greece, 8 divisions attacked a prepared and entrenched Greece. Needless to say the campaign went poorly, and ultimately the Italians had to be rescued by Germany.
This level of professionalism went all the way up and down the structure. The Italian junior officers, non-commissioned officers, and soldiers were uniformly undertrained and unprepared for war. When they survived long enough to learn, the Italians frequently became great. They were know for bravery and veteran units could match the Germans for toughness. But green Italian units tended to suffer disproportionately. Needless to say this also tended to affect morale. The British captured hundreds of thousands of Italians in the early African campaigns. But once backed up by the Germans and put under Rommel's command they proved to be quite capable.
In short the Italian army was poorly equipped, poorly supplied, poorly led, and poorly trained. So for the most part they performed poorly. However in those instances where one or more of these were changed the Italians could do quite well.