Well, I think that Italy was off to a great start in this period. The Nation that historically Industrialized OTL was the UK, because of several social trends working on them at once. Italy's first problem is that its run by Germany for much of this period, so it won't be stable enough to support Industrialization.
The Second is that the Catholic Church, with ironclad rules against Usury, are going to stifle capitalism or any effort that would lead to excessive profit, which is behind Factories in the First Place.
Finally, I'm not sure that Italy has the resources to Industrialize. Unlike Germany and the United Kingdom, Italy has few natural resources, like coal, to begin the process.
Now these problems individually are each surmountable--Italy can be unifed or incorporated into another country with coal sufficient launch the change and Rome is an excellent choice for a National Capital, in terms of development. The Power of the Catholic Church can be curbed in terms of Usury with the correct social developments. But the problem remains fuels. The Italian people are smart enough and cultured enough to make the switch, but they lack the materials to do it, and there is also the major concern that the United Kingdom would simply be able to do it better, faster, and stronger then Italy can.
If I had to Start down this path, I'd suggest that the Holy Roman Empire pushes further south and KOs the Papacy, replacing it with a figurehead with little real power. The Rest of Italy is then incorporated into the HRE, while the power of the Pope steadily Decreases. The HRE, instead of being split of Martin Luther, formalizes into a legitimate Empire all the while including Italy. Internal tensions are resolved with a positive compromise that forces the Catholic Church out of state power and into a parallel power.
By the 16th Century, however, HRE was threatened by one of their neighbors at its greatest height--Poland-Lithuania. HRE, under the threat of war from a rival power, develop Industrialization simultaneously in Italy, Germany and Bohemia (Northern Italy is a pretty good place Logistically for this to happen).
England, however, is wracked by repeated Civil Wars for the next 200 years as Parliament, varying contenders to the throne, Scots, Nobleman, and Libertarians all vie for control of the country, earning it the name of the "Bloody Island" and suffering far too much instability to ever develop. Instead, many of the would-be inventors of Industrial technology move to HRE and begin to build factories in Germany-Bohemia-Italy.
There you go, Italy first to industrialize--and this assumes that Italy/Germany/Bohemia somehow qualifies.
